I was taught by a highly adept veteran trader who used to work for the Bank of America that having a trading plan when trading your own forex account is of vital importance.Without the neccessary intention and clarity, you are going to make it very difficult for yourself to reach any
sort of desirable outcome in your trading day.This is because you don’t know where you’re going, you’ve know idea where you’re supposed to be headed and as a result the market will gracefully take pips without any emotion or hesitation, leaving you with all the emotion.If I was to start trading a new mini-account tomorrow with any broker I would immediately formulate a workable trading plan, looking ahead at least 2-3 years in to the future with regard to where I want to be with my forex trading business.Before having a trading plan, I was a small fish in a lake of Great White Sharks so to speak. I had no intention, no edge, no clue as to why the market was doing what it “shouldn’t” have been doing. The only choice was to learn from every little mistake and every little decision and each good choice as well.Firstly I would want to trade using a demo account with my broker for at least 1-2 trading weeks, just to get very clear and confident with the execution of the platform. I would also use this time to build a relationship with the dealing desk so that they are ready to take care of my business in future.I then like to break up the trading plan in to 3 monthly targets and sub-quarterly monthly targets in terms of how many pips per day I am committed to take out of the market.Next I start to think about how much risk I am prepared to take in order to be making the most of my ability and capital whilst giving myself room to improve and maintain a stability and consistency.I will then be meticulous in writing down actual projected changes in account balance month by month, week by week and with space for day by day actual results.For example, you want to open an account with $2000 and trade minis (fractions of lots) at first.In week 1-2 I am familiarising myself with the platform. I am also aiming to take 12 pips each day from the market for each trading day as averaged by the end of each weeks P/L.So, the real week 1 begins the following week.Week 1-4: TARGET 60 pipsLots traded: 0.3, Leverage x 100Week 1 2 3 4Day 1 /12Day 2 /12Day 3 /12Day 4 /12Day 5 /12T B $2130(TB = Target balance)You can imagine filling out the rest of the table, better yet, start creating your own trading plan, including the weekly balance targets. These are just figures, they are not to be used to judge yourself. You are just keeping track of where you need to be to be on-target of your trading plan. They do not affect your strategy. You just have the goal to be in alignment with or ahead of your trading plan.Moving forwards from here, I will then create a column for the monthly targets 1-3. The aim would be to trade 0.5 lots after month 1 provided everything is going smoothly on the practise month.Month 1: 60 (pips per week) x 4 (weeks) x 3 (dollars per pip) = $520 profit target by end of monthTarget: $2520 by end of month 1Month 2-3: 60 (pips per week) x 4 x 5 ($ per pip) x 2 (months)= $2400 profit target in months 2 and 3Target: $4720 (by end of month 3)After 3 months of trading and being on track with the plan, it’s time to trade 1 lot for 3 months.$10 (per pip) x 20 (days per month) x 3 (months) x 12 (pips) = $600 x 12 = $7200TARGET: $13,920 (by end of month 6).Ok, so to be on track with your plan you need to average 12 pips per day only and by the end of 6 months (starting with $2000 mini account) you have turned $11,920 profit.This is where the fun starts to begin.Decide that by month 6 you will be trading 2 lots and you are talking $20 per pip (for 6 months).6 (months) x 2 (lots) x $10 (per pip) x 12 (pips per day) x 20 (days per month)= $28,800Target end of year 1 = $42,720Now that you have mastered taking out your 12 pips each day from the market and showed that you can trade for a year you can trade more lots. For example 5 lots for 1 year.5 lots x $10 x 12 pips/day x 20 (days/month) x 12 (months)Years target profit: $144,000End of 2 years target: $186,820(from a $2000 starting balance)This is quite a healthy income from 2 years of keeping to your plan. It’s more than a lot of doctors, and imagine the doors that will be open by this time. This is not a get rich quick plan, it is a trading plan where you only need to take out 12 pips from the market each day on average. 2 moves of 30 pips means you’ve achieved your weekly target.I think its important to keep this long term perspective in perspective. It’s achievable and simple, but not easy. It will require patience, discipline and a strategy to find entry in to the market that virtually guarantee your 12 pips or 2 x trades that take 6 pips in a day.This last part is always down to the individual forex trader. Others can only lead the way and point the direction. The traders own responsibility and willingness to put forth the neccessary level of independence and strong sense of self belief will carry that person through.
sort of desirable outcome in your trading day.This is because you don’t know where you’re going, you’ve know idea where you’re supposed to be headed and as a result the market will gracefully take pips without any emotion or hesitation, leaving you with all the emotion.If I was to start trading a new mini-account tomorrow with any broker I would immediately formulate a workable trading plan, looking ahead at least 2-3 years in to the future with regard to where I want to be with my forex trading business.Before having a trading plan, I was a small fish in a lake of Great White Sharks so to speak. I had no intention, no edge, no clue as to why the market was doing what it “shouldn’t” have been doing. The only choice was to learn from every little mistake and every little decision and each good choice as well.Firstly I would want to trade using a demo account with my broker for at least 1-2 trading weeks, just to get very clear and confident with the execution of the platform. I would also use this time to build a relationship with the dealing desk so that they are ready to take care of my business in future.I then like to break up the trading plan in to 3 monthly targets and sub-quarterly monthly targets in terms of how many pips per day I am committed to take out of the market.Next I start to think about how much risk I am prepared to take in order to be making the most of my ability and capital whilst giving myself room to improve and maintain a stability and consistency.I will then be meticulous in writing down actual projected changes in account balance month by month, week by week and with space for day by day actual results.For example, you want to open an account with $2000 and trade minis (fractions of lots) at first.In week 1-2 I am familiarising myself with the platform. I am also aiming to take 12 pips each day from the market for each trading day as averaged by the end of each weeks P/L.So, the real week 1 begins the following week.Week 1-4: TARGET 60 pipsLots traded: 0.3, Leverage x 100Week 1 2 3 4Day 1 /12Day 2 /12Day 3 /12Day 4 /12Day 5 /12T B $2130(TB = Target balance)You can imagine filling out the rest of the table, better yet, start creating your own trading plan, including the weekly balance targets. These are just figures, they are not to be used to judge yourself. You are just keeping track of where you need to be to be on-target of your trading plan. They do not affect your strategy. You just have the goal to be in alignment with or ahead of your trading plan.Moving forwards from here, I will then create a column for the monthly targets 1-3. The aim would be to trade 0.5 lots after month 1 provided everything is going smoothly on the practise month.Month 1: 60 (pips per week) x 4 (weeks) x 3 (dollars per pip) = $520 profit target by end of monthTarget: $2520 by end of month 1Month 2-3: 60 (pips per week) x 4 x 5 ($ per pip) x 2 (months)= $2400 profit target in months 2 and 3Target: $4720 (by end of month 3)After 3 months of trading and being on track with the plan, it’s time to trade 1 lot for 3 months.$10 (per pip) x 20 (days per month) x 3 (months) x 12 (pips) = $600 x 12 = $7200TARGET: $13,920 (by end of month 6).Ok, so to be on track with your plan you need to average 12 pips per day only and by the end of 6 months (starting with $2000 mini account) you have turned $11,920 profit.This is where the fun starts to begin.Decide that by month 6 you will be trading 2 lots and you are talking $20 per pip (for 6 months).6 (months) x 2 (lots) x $10 (per pip) x 12 (pips per day) x 20 (days per month)= $28,800Target end of year 1 = $42,720Now that you have mastered taking out your 12 pips each day from the market and showed that you can trade for a year you can trade more lots. For example 5 lots for 1 year.5 lots x $10 x 12 pips/day x 20 (days/month) x 12 (months)Years target profit: $144,000End of 2 years target: $186,820(from a $2000 starting balance)This is quite a healthy income from 2 years of keeping to your plan. It’s more than a lot of doctors, and imagine the doors that will be open by this time. This is not a get rich quick plan, it is a trading plan where you only need to take out 12 pips from the market each day on average. 2 moves of 30 pips means you’ve achieved your weekly target.I think its important to keep this long term perspective in perspective. It’s achievable and simple, but not easy. It will require patience, discipline and a strategy to find entry in to the market that virtually guarantee your 12 pips or 2 x trades that take 6 pips in a day.This last part is always down to the individual forex trader. Others can only lead the way and point the direction. The traders own responsibility and willingness to put forth the neccessary level of independence and strong sense of self belief will carry that person through.
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