Forex: Planning For the Year Ahead

Filed under: Learn Forex Trading |

 

It is this time of the year that we all start to make tentative plans for the year ahead. If you trade forex in any serious way whatsoever, you will no doubt formulate a trading plan just prior to the New Year, and try to stick to that plan throughout the year.

 

Formulating a trading plan may include a number of different elements. The first one has to be your trading capital and your money management. You must first decide on how much capital you can afford to trade with (and lose). Once you have this figure, you can decide on how much you are going to risk on each trade. My maximum risk per trade is 1% of my trading capital, and it will remain so for next year. You also have to think about risk-reward scenarios. My minimum risk reward next year will be 1:2, and I will be putting trades on with risk-rewards of 1:3, 1:4, and 1:5 where a logical level permits.

 

Next, you must have a good understanding of what your trading methodology will be, what timeframes you will trade from, and what currency pairs you will look at. I have eleven pairs that I trade, and I exclusively look at the daily and 4-hour timeframe charts. The trading method I use is to find price action signals at significant areas of support and resistance. If possible, I like to trade with the trend, and I favour pin bar and engulfing patterns as my price action signals. These are all methods that I will continue to use in the New Year.

 

What I plan to change for next year is to be a little pickier with my trades, and to only trade the very best setups. I will also improve my organization, and I plan to review every trade that I have done at the end of the month by printing out a visual record of each trade as I go. This is my plan… What is yours?

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