2. Develop your trading plan:
In trading you have only two choices: Follow a methodically written plan or fail. Here are 5 essentials that every plan should include:
Will I trade only one specific currency pair or many?:
You may be strictly a stock or currency trader, or you may be trading multiple markets. Create a separate category in your trading plan for each financial instrument.
Time frame traded:
As a trader you must know the time frame you are executing your trades. Day traders for example would be trading lower time frames whereas swing and position traders would trade higher time frames usually 4 hours or daily.
Identify your market indicators:
You might trade a particular currency based on a series of chart indicators related to momentum, moving averages and trend lines. Write down the exact conditions that must be met before you can enter a particular trade.
Decide ahead of time how many shares or lots you will purchase:
Thinking through the trading size ahead of time will help you avoid taking risks that may result in tremendous loss. Record the number of shares or lots you intend to purchase.
When to Enter & Exit:
Your goal might be to buy a particular currency when it reaches a specific price. Write down the price at which you want to enter the market and at what price you will get out.