Building your trading plan will be by far the most important part of your forex trading success. Too many forex traders are currently entering trades without a clear vision or goal in mind. They have a fear of missing out. They have a “feeling” that their trade is going to be the winning one, raking in loads of pips! When it turns out that the charts didn’t go their way, the first reaction is to quickly try again and forget the losing trade. Keep in mind that the fading affect bias is a powerful cognitive bias! This approach eventually leads to losses, pushing profitability even further away.
These traders lack a trading plan, a well-defined description of the “what” and “how” of their trading business (notice how I said business. You should treat it as such if you want to take forex trading seriously!). In this post, I will guide you through the steps needed to make such a trading plan, and give you a template of how a trading plan could look like.