Trade Forex Trading



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Forex Trading Plan –

Explanation of This Plan At



JUSTIFICATION FOR A TRADING PLAN

1. TRADING IS A BUSINESS, SUCCESSFUL BUSINESSES ALWAYS HAVE PLANS

• Businesses that are successful always start with a plan.

• Successful business plan will guide you to success, think of your plan as a map; it is a constant reminder of how you will consistently pull profits from the forex market.

• Difference between a successful currency trader and a losing trader is the plan.

2. TO KEEP ME IN THE RIGHT DIRECTION

Consistency is important in your trading routine to measure how successful you are.

Keep you on target, read it everyday and stick to it. 

IF YOU HAVE A GOOD PLAN AND YOU ARE DISCPLINED ENOUGH TO STICK TO IT YOU WILL BE SUCCESSFUL.

TRADING SYSTEM

GOALS OF THE SYSTEM

1. Ability to IDENTIFY A TREND AS EARLY AS POSSIBLE .

2. Ability to AVOID WHIPSAWS .

A Trading System should find a compromise between the two Goals,

Find a way to identify a trend as early as possible but also find ways to help you distinguish the fake signals from the real ones.

FUNCTIONS OF EACH INDICATOR

MA - Identify a new trend as early as possible.

RSI - Confirm the start of a new trend.

MACD - Confirm short term movement at entry

TIMEFRAMES

• Main timeframe is the 15 Minutes.

• Signals are generated on the 15 Minutes timeframe.

  15 Minutes Chart

• 5 & 7 LMA

• RSI (14)

• MACD

RULES

TREND: LONG ENTRY

Entry

15 Minutes Chart

1. Both MAs are moving UP

2. RSI greater than 50

3. MACD is above Centerline Mark

LONG EXIT

1. RSI gives opposite signal

2. Moving Average gives opposite signal

   

RULES

TREND: SHORT ENTRY

Entry

15 Minutes Chart

1. Both MAs are moving DOWN

2. RSI less than 50  

3. MACD is below Centerline Mark

SHORT EXIT

1. RSI gives opposite signal

2. Moving Average gives opposite signal

 

ROUTINE – DAY TRADING ROUTINE

1. Signals are generated using 15 Minutes timeframe.

2. Signals to be executed immediately rules are met (Not Before).

3. Entry signals should be executed during daytime (0500GMT – 1600GMT).

4. Trades should not be held for more than 2 hours

5. Close all open orders at the end of the day.

 

TIME OF DAY TO WATCH MARKET

Watch market during daytime

Day Trading Routine (0500GMT – 1600GMT)

CURRENCY PAIRS TO TRADE

Trade only the most liquid currency pairs; these are the currencies that are more liquid and therefore easier to analyze their market movements.

EURUSD

GBPUD

USDJPY

AUDUSD

EURJPY

GBPJPY

USDCAD

NZDUSD

USDCHF

These are the most liquid currency pairs that have predictable Forex trends that are much easier to analyze and trade.

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MONEY MANAGEMENT

• Day trading - Low risk High return method

• Open orders that have a high risk to reward ratio 2:1 or more

• Stop loss

• Set TP target

• Never risk more than 5 % of account total account balance

• Never risk more than 2 % on a single trade

  MINDSET/PSYCHOLOGY

• Trade without Emotions (greed, fear, anticipation, impulse, bias, overexcitement)

• I trade what my eyes see not what I feel.

• I will be patient.

My job is not to be the trading system!

It is not to decide which trades looks promising.

That is the job of my trading system. My system has a set of rules which tells me this is what I follow. Do not get caught up in price action and make rules as you go along.

MY JOB DESCRIPTION IS

To sit patiently and wait for my system to indicate that it is time to enter or it is time to exit. And then with great focus I execute signals as planned.

Taking trades not indicated by the system, second guessing the system, hesitating and getting in late, anticipating and getting in early are all common place and are as a result of lack of faith in the trading system and not having a burning focus on accurate execution.

GOAL: To have 100% undivided focus on mastering my ability to execute my Forex trading system accurately.

The more you develop the ability to step back from price movement and watch the market dispassionately, waiting for a signal, the easier it will be to witness the fluctuations of your emotions without getting sucked into them allowing them to throw you off your game.

Philosophy: Always follow the trend, do not try to catch the market top or market reverse, If you always follow the trend 9 out of 10 times you will be in the right direction as opposed to trying to catching a market top or market bottom you will only be right 1 out of 10 times. Trend direction is defined as the direction of the Day Chart or Weekly Chart. The trend is your friend – trading along the direction of the day chart, means that even if there is a retracement that catches you, the day trend will save your trade. On the other hand if you trade contra trend and your trade goes against you nothing can save you – The Trend is Your Friend.

WEAKNESS

1. I am greedy.

2. I overtrade

3. Make a list of all your weaknesses that are interfering with your trading. This is the first step to help you overcome these weaknesses. Use Forex psychology to help you overcome them.

NB: by writing down your weaknesses you will start recognizing them as you continue practicing, once you do this you will start to avoid this mistakes and your profits will improve.

GOALS

• To focus on exit just as much as I do on entry.

• Always protect my account using stop loss, money management methods, follow the trend and always following the rules of my system & plan.

• Never second guess or go against my system.

• To always keep up my discipline.

• Follow all the rules of my system and never break them.

• Trade fewer times and execute all my signals correctly.

• Trade what I see, what the system + charts are telling me.

• Sit patiently and wait for signals from my system.

• Achieve consistent profitable results.

Write down goals and focus on achieving these goals

FOLLOW YOUR TRADING SYSTEM

This is the most important part of creating the trading system.

Always follow the rules - Stick with the rules

Be disciplined and patient enough

 

JOURNAL

Log all my trades in a Forex journal so as to track my progress.

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Trade Forex Trading is a learn Forex website: Visit & learn, the main sections of the website are:

1. Learn Forex Lessons

2. MetaTrader 4 Tutorial

3. Forex Trading Strategies

4. Forex Trading Indicators

5. Learn Stock Indices Trading

6. Top 100 Forex Broker Rankings

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FOREX TRADING SYSTEM

Timeframe

15 Minutes Chart

Indicators that identify a new trend

Moving Average Crossover System

Indicators that confirm the trend

RSI

MACD

Long Entry

Both Moving Averages pointing up

RSI above 50

MACD is above Center Line Mark

Short Entry

Both Moving Averages pointing down

RSI below 50

MACD is below Center Line Mark

Exit

MA gives opposite signal

RSI gives opposite signal

Risk Management

Stop loss – 15 Pips

Take Profit – 30 Pips

Reward to Risk 2:1

Currency Pairs To Trade

EURUSD, GBPUD, USDJPY, AUDUSD, EURJPY, GBPJPY, USDCAD, NZDUSD and USDCHF

Confirm Signals with 1 Hour Chart, Signals generated on 15 Minutes chart should be in the same direction as that on 1 Hour Chart.

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Forex Plan

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