The trading plan is a complete guide of what trader will do in the markets. The plan should include clear rules for entering and exiting the market, money management rules, as well as describe time frames, trading instruments. It should be drawn up before starting trading.

The trading plan consists of:

1. Trading style. Define what type of trader you are: scalper, a day, a swing, or a position trader. For example, scalpers execute a big amount of trades during a short period and fix profit in several pips, while swing traders hold transactions from a few days to a couple of weeks.

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2. Traded financial instruments. There are a lot of instruments to choose from: currency pairs, metals, commodities, CFDs etc. Each of the instruments has their own characteristics and trading conditions. For beginners, it is recommended to choose 4-5 trading instruments and study them thoroughly.

3. Signals to enter the market. Make an analysis of the current market situation. You can do it using instruments of technical analysis: MACD histogram or Stochastic Oscillator, support and resistance levels, chart patterns etc. Whatever trading strategy the trader is using, it is necessary to make sure of the reliability of a signal.

Analyze the fundamental data and assess their impact on the currency. Monitor the news in the economic calendar. It is not recommended to open transactions 30 minutes before and 30 minutes after the release.

4. Signals to exit the market. Identify when you will close the position. It is important to have a sure strategy according to which you will exit the market.

5. Stop Loss and Take Profit levels. These orders help traders limit losses and fix profits at sharp market movements. To limit losses, determine the amount you can afford to lose and place Stop Loss. The recommended risk level should be 2-3% of the trading capital for each transaction.

Take Profit is used to fix profit. The standard loss/profit ratio is 1:3. The potential profit should exceed the risk in several times.

6. Analysis of transactions. Analyze your closed transactions, note the results and make mistakes correction. In such a way you can improve your trading strategy.

7. Trading goals. Write what you want to achieve on Forex. The goals should be clear and achievable. Strive for ideal deals written in your trading system.

The Forex trading plan has to meet exactly your requirements and strategy and includes specific items that need to be corrected from time to time. Plan your trading and follow your trading plan.

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