Posts Tagged ‘Trader’s business plan’

22.11.2010 Post in Trading

Before starting the work on Forex each trader needs to elaborate his/her own, individual business plan that will help him to succeed in carrying out operations on the market.

We shall touch upon the most important points to be considered when elaborating an effective business plan.

1. Personal growth

Being optimistic is vital for a trader, since negative mood is a key hindrance to cope with.

It is a peculiarity of human psychology that one cannot succeed all the time – there are both ups and downs in any enterprise.

A negatively thinking person is fated to suffer losses and be incapable of taking steps towards success. Thus, a trader needs to set achievable goals. Only through accomplishing small subgoals will you reduce negative emotions’ effects and develop positive thinking.

A trader should seek to transform all his/her negative emotions into positive ones. More positive thoughts will help you to get rid of previous negative impressions. The victory over negative emotions is the first step towards success.

2. Figuring out the aim of trading

1.       Defining general priorities of activity.

2.       Calculating time expenditures and economic costs.

3.       Writing a plan.

4.       Methods of planning.

5.       Maximum hedging against possible losses.

6.        Profit and loss calculation.

Finding out the main priority of activity

Let us outline major priorities of a trader. If you strive for success on Forex, you definitely should:

–          invest in books, seminars and market researches;

–          cooperate with prosperous traders;

–          be open to new concepts and ideas.

A trader willing to gain constant profit should:

–          focus his/her attention upon price dynamics of a given short-term trading market;

–          make every attempt to ensure over 70%profit;

–          assist other traders in exploring Forex.

Calculating time expenditures and economic costs:

  • Economic costs:

Before becoming a trader one should define the amount of funds necessary to start with, including an initial deposit, computer software, a trading program, quotations, books etc.

  • Time expenditures:

These imply the time you are ready to spend for trading. Some traders work several hours a day, while others can trade as much as 16 hours daily. You need to decide which period is the most convenient for you and to keep an eye on what happens on the market.

Writing a plan

It is of crucial importance to chronologically record all the operations you carry out on the market. Write down all the deals you made in your trader’s notebook in order to analyze them at the end of your working day.

Methods of planning

A trader should choose the methods he/she will use for entering the market and be always prepared to react to slightest market changes. A trader should be able to clearly gauge a moment to close a deal whether it is profitable or unprofitable. Decide in advance on which ways of closing a deal you will employ.

Maximum hedging against possible losses

If you suffer losses deal after deal, there must be some drawback in the strategy you elaborated. Sticking to such style may well result in complete waste of the deposit. If, however, you are armed with a set of rules for this situation, you are sure to preserve you composure at watching your balance decreasing so that you will be able to restore profitable trading.

Profit and loss calculation

The last but not the least: a trader should define what profit he makes for a month taking into consideration all the trading expenses. Forex trading is in fact a sort of business which sooner or later yields profit. In order to make it maximum, elaborate your own trading plan and then be sure you will succeed on Forex.

Added by Evgeny Staroviborny,
InstaForex Development manager