It is essential to have a good trading plan checklist if you want to be successful at trading Forex. The trading plan must be tested, checked, tweaked and tested again before you attempt to trade with it using actual funds. It is highly recommended to have both a Forex trading plan checklist and a Forex trading journal and use both religiously. The checklist is an important part of the trading plan because it tells you objectively whether to enter a trade.
Every Forex trading plan begins with a strategy. You must delve into your personality to see what type of strategy works with your personality and financial philosophies. Are you a risk taker? Can you handle the stress of fast paced trading? Do you need time to think and process before making decisions? The answers to these questions all factor into the decision of what type of trading strategy is best for you. The time frame is an important part of this decision as well. Is Forex trading your full time job? Do you have another job that only allows you to spend time on Forex in the evenings?
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Goals are a critical piece of the puzzle. Your Forex trading plan must keep your goals in sight, and if all goes well with this plan, those goals will be obtainable. With clear goals, you can set up guidelines for trading. Making sure you know what your ideal trade looks like is a helpful tool in setting up your Forex trading plan and a checklist for sticking to it.
A trading checklist will help you with each Forex decision you make. Making the checklist is the easy part. Using the list and sticking to it rather than using your emotions to trade and your gut feelings is much harder. Improvising will not make you a better trader even though it is much more exciting and seems like much more fun. When you trade using a pre-planned checklist, based on a well thought out strategy, you are definitely more likely to be successful. When you are on the verge of jumping into a trade, make sure you have checked your checklist and determined that the trade is a good one.
Your Trading Plan Checklist should contain many of the following questions:
Is the market trending?
Do the indicators that I use support this trade?
Does the signal I am following make sense in the market?
Are there other supporting factors besides the price action?
What is happening in the news that will affect the market?
Does the risk involved work with my trading philosophy?
What is the risk/reward ratio? Does it work for me?
What is my plan for exiting this trade?
Have I set up appropriate stop losses?
And most importantly……
Does it work with my trading plan?
Once you have gone through all these questions and the trade still appears to be a good one, then execute it and hopefully it will meet all of your expectations.
