One of the most succinct quotes on the importance of good planning comes from Antoine de Sainte-Exupery who said, “A goal without a plan is just a wish.”
I’m sure a lot of newcomers to the forex would wish for instant success. Some may wish to make a fortune through their forex trading endeavours. Others may just wish to escape the rat race and enjoy a good income from comfortable and dignified surroundings. These wishes will almost certainly fall by the wayside unless accompanied by a solid and clearly defined forex trading plan. In this article, we’ll show you how to plan for your forex trading success.
How To Plan For Your Forex Trading Success
Be Realistic. First, ask yourself what you’re expecting to deliver by way of trading ROI. If you’re starting out with £10,000 it’s ridiculously optimistic to expect to make a million quid by the end of the first year (or the first month, if you go by the nonsense some forex product sales pages will spout!)
Address The Foundations. Trying to jump right into advanced forex trading is a recipe for disaster if you don’t have a good grasp of the basics. Your planning should have a very clear and structured blueprint for evolving as a trader. How will you learn the basics? How will you begin practice trading? How will you know and assess your progress? Don’t base your trading business on a house built on quicksand – or you really will be sinking your equity.
Plan For Gradual Equity Release. Many people eek and struggle to get the smallest pots of trading equity. Yet, they are quite content to simply flutter it away by trading on their real accounts too quickly. Unless you can comfortably afford to lose your starting equity, trading as a newbie is rife with danger. The vast majority of newbies who pit their capital against smirking markets will simply lose it all, or at best face crippling drawdowns. Instead, start off small – practice accounts exist for a reason, and by using them you can gradually begin trading with small amounts of equity while you gain market experience and familiarity.
Commit To Trading. Sometimes, people who are looking for an extra income from somewhere simply flirt with the idea of trading. They learn a few drabs of information randomly, and try and trade in a half motivated fashion. Often, they may be looking at multiple other ways of earning an income. If you intend to trade the forex, you must commit to it and appreciate that it’s a long term project. This does not mean you have to trade full time – part time trading is fine if that’s your aim, but set a schedule for your forex trading and then stick steadfastly to it.
Know The Pitfalls. There are many challenges that new traders must accept when forex trading. By understanding and planning for these possible pitfalls, a new trader is better able to identify them and limit their damage. Drawdown is a classic example – we’d all love to hit sixes with every ball, but in the world of forex you’re more likely to get 4 or 5 ducks in a row! Drawdown happens a lot to new traders – it happens to experienced traders too, and by appreciating and accepting it as a trading inevitability, traders can better deal with the situation when it arises.