Forex Trading Plan: 3 Step Blueprint You Need

Do you have a forex trading plan? This is the one thing a lot of new traders tend to neglect when they get started. Now when I refer to a trading plan, I’m not talking about having a trading journal, that’s what you use to track your trades and YES that is very important.

However a forex trading plan is a blueprint, a set of guidelines that you follow when you go out into the market and begin trading. It’s rules you follow to help you stay disciplined and focused to get the success you want out of your trading day.

So let’s talk about the 3 step blueprint.

Forex Trading Plan: 3 Step Blueprint

1. Time

What time of the day are you going to trade and for how long? This is very important. Establishing the time that you are going to trade, plays into the currency pairs you’re going to possibly focus on.

Are you going to trade during London, New York, Australia or Asian session. Is it going to be early in that session or during crossover time (that’s when two of the trading sessions overlap). Is your window going to be 2 hours or 4 hours.

Your time is important and I’m sure you have a life to live, so the first determining factor is basing it around your schedule and availability to trade at that time, and then go from there.

2. Pair

What pair are you going to trade? As I said earlier, the session you trade will determine the pairs you look at. If you’re trading London session, then the GBP & EUR pairs are gonna move the most. New York session? The USD & CAD pairs are gonna dominate and so forth.

I like to look at 5 potential pairs to trade and then take the best ONE of the five. Once I’m in that pair, I’m in that and nothing else, I’m not focused on any other pairs during that time.

If it hits my profit or I move my profit into stop loss, securing me a risk free trade, then I may look at one of my other setups. But when you’re in a trade, focus on that one pair only. Can’t chase multiple rabbits, focus on one and grab it.

3. Percent Goal

The last part of your blueprint is going to be, what is your percent goal. This will give you something concrete to strive for and help you predict the growth of your account based on that trajectory. Will you win every single trade no, so of course as you go losses will play a part.

However, if you set a goal to grow your account, 10% for the week, one week you hit it and the next week, you only get 8% growth, that’s still a damn good week. Now how does this come about, part of it is your risk to reward ratio. Minimum you should be doing a 1 to 2 risk to reward, a 1 to 3 is even better.

What does that mean? If you’re risking let’s say 3% on a trade, your reward for that should be 6%, that’s a 1 to 2. A 1 to 3 is you risking 3% and your reward is 9% on that trade. Do you see how that will keep you winning, week in and week out, even if you lose a trade or two, you will still be up!

In Closing

So in closing, do you see the value of having a Forex trading plan? It doesn’t matter if you’re just starting to learn forex trading or if you’re a seasoned vet.

If you follow these 3 steps every time you go into the market you’re setting yourself up to have a solid trading day, week, month and year. Hope you found this article to be of value and I look forward to dropping some new content on you next week!