Why Do Forex Traders Need A Trading Plan?

In short not only in trading in any aspect of life there need to have plan, but here let's talk about trading plan. A trading plan will make trading simpler than it would be if you traded without one. Think of when you use a GPS device. (Or Google Maps on your smartphone.)

You indicate and search where you want to go. It then figures out where you currently are and then shows you how to get to where you want to go. You see that You‘re able to all the time check on your GPS to see if you’re still on the right track. When you make a wrong turn, it knows to make adjustments, and it points you back in the right direction to go on

The same applies to trading plan, it is your trading GPS. It will guide and show you where you currently are as a trader and help you get to your destination: consistent profitability.

Think of the example we cited then you can easily justify that Traveling without a GPS wouldn‘t be a smart idea. You wouldn’t know how to get to your destination and it‘s highly possible that you’ll drive around lost like a lost chicken out of their crew heading no where to know. Probably you‘re thinking could use an ancient object called “maps” instead, but we have no clue what that is. Please don’t make such absurd suggestions again.

Trading without a trading plan would be similar to as driving without a GPS–a bad idea. You‘re trying to get to this Promised Land called “Consistent Profits,” but since you have no way of knowing whether you’re headed in the right direction, youll most likely end up blowing out your account.

A trader using well trading plan, will have the chance of heading in the right direction. And will also have a framework to measure your trading performance. Similar to GPS, where you will be able to monitor your performance continuously, which allows you to trade with less emotion and stress.

Never be a Cowboy Trader!

Having no trading plan, this would be nearly impossible. You will be a “cowboy trader” rather, shooting from the hip, trading by the seat of your pants, depending on your gut, guesses, or signals from strangers. But by doing so, you're not trading – thats just gambling!

At any time you trade, you‘ll likely end up a tense, emotional wreck, crying yourself to sleep as your rollercoaster account balance shreds at your spirit. (Okay pretty drastic, but we think you get the picture). Just like you use a GPS to figure out the route to be taken and to judge the progress that has been made, your trading plan also defines how you’ll become consistently profitable and tells you if youre on right track.

Most significantly, if you suck at trading (and you certainly will in the beginning), you will realize it's down due to one of two reasons: either there‘s a problem in your trading plan or you are not sticking to your trading plan. When you’re trading without a plan, it will not be possible for you to realize what you're doing is right from wrong

There is no way You can evaluate your results, so you‘ll never know how to stop sucking. We can’t emphasize this enough…

Let's repeat “If you fail to plan, then youve already planned to fail.”

Seriously, a trading plan doesnt guarantee success, but a good plan that is overlooked and followed will help you stay in the forex game longer than traders who fail to go with trading plan.

Survival is better than failure and it should be your first goal as a newbie trader.

Recall, and take note that 90% of new traders don‘t make it. And I believed you would like to be part of that special “10%” that does make it. You’re probably thinking, “Ba humbug! Trading plan, schmading plan. I can be part of that 10% without a stinking trading plan!”

It may be tempting to to trade by the seat of your pants, may be attractive but if you don‘t build clearly defined trading plans and be disciplined enough to follow them consistently, you’ll have much difficulty making consistent money as a trader. Never take any chances. Have a trading plan.