Before anyone begins trading they must have a trading plan. Even before you have a demo account you must have a trading plan. This is because you want to trade your demo account exactly like you trade your real account and in your real account you will have a trading plan, so that means in your demo account you will have a trading plan.
What is a Trading plan?
A trading plan is basically a business plan except, a trading plan is for traders that want to succeed in forex. If you are serious about being a trader you will have a plan. This is what you should have in your plan.
Overall purpose of why you are trading and what you want to accomplish. Goals that you can measure your progress to see if you are winning or losing. What steps you must take to see your goals become successful and a system that you have developed to include: the trading strategy, money management, trading routine. You should set your mindset, write down that you will be successful.
Be committed to follow the rules and you will not give up when times are difficult. I know that this will be difficult, but I know what it takes to succeed and I will follow my trading plan. The plan is there to guide me so, I will follow the plan. I wrote it therefore I will follow my plan, not my feelings or emotions. My feelings and emotions will lie to me but my plan that I wrote works and by following the plan, I will have evidence and proof that it works.
Your weaknesses must be noted, write them down and come up with a strategy to defeat your own weaknesses. Don’t be a fool we all have weaknesses and those that are successful will identify them and deal with them. Set up ways to overcome them, for example if you have difficulty following your money management rules find write that down and tell yourself today I will follow my money management rules. If I have to get my mother to sit with me and make sure I follow them I will. If I have to get approval from my broker to make sure that I am following my plan I will. So what I mean is don’t let your self cause failure. Make sure that your weaknesses don’t take you down. Do whatever it takes to beat those weaknesses.
Keep a trading journal, it is important to have a trading journal. It takes discipline to maintain a journal, yes it is hard, it takes about 5 minutes once you set it up. Make it part of your routine. Writing down what trades you make which pair, what price, notes as to why the signals you got, the reason it looked good. As you do this you will begin to learn where you messed up. You will begin to notice that when you don’t follow rules you get creamed. The reason I do it is because it teaches me to follow the rules. I hope you are beginning to see a theme here. Trading is not a gambling event to get rich quick. Trading is creating a system and following it. The idea is simple, but it is oh so hard to pull it off. I use a spread sheet for my trade journal.
This article should help you with your creating your trading plan, if you don’t have one you will not be successful as a trader.