This article looks at the key points to a foreign exchange Melbourne trading plan.
It is important that you have a trading plan when you look at trading on the foreign exchange Melbourne. By having a trading plan you are able to focus your trading toward reaching your goals. You are also able to avoid the impact of trading emotions. When you create your foreign exchange Melbourne trading plan you have to consider a number of key points. Looking at these points will help you ensure that the plan covers everything that it needs to and is tailored to your trading.
Your Foreign Exchange Melbourne Objectives
The first point that you have to look at when you create your trading plan is your foreign exchange Melbourne trading objectives. There are going to be your trading goals that you will be working toward. It is important that you have these objectives before you look at anything else. The reason for this is that the objectives will impact the trading that you are going to be doing. All your trading decisions should lead up to these objectives.
There are two types of trading goals that you can look at. The first is the monetary goals and the second is the process goal. The monetary goal will have you working toward making a certain amount of the forex market. The process goals will have you trading with consistency and according to the trading strategy and plan that you have.
Determining Your Risk Capacity
The second point that you have to look at when you create a trading plan is your risk capacity. There are many traders who make the mistake of assuming that risk capacity is the same as risk tolerance. This is not true as risk tolerance only makes up a part of your risk capacity. The other part of risk capacity is the capital that you have and your overall long-term objectives.
There are many traders who have a high risk tolerance, but have a low risk capacity because they do not have the capital to buffer the risks that they can handle. You need to know what your risk capacity is because this will affect the way that you trade and the strategies that you use. If you use a high risk strategy with a low risk capacity then you are more likely to lose on the market.
How and What You Are Trading
The last point that you should consider when you look at your trading plan is how and what you are going to trade. This will include the strategy that you use and the currency pairs that you trade. The strategy that you use needs to be one that you are comfortable with and completely understand. If you are not comfortable with the strategy that you are using then you are not going to stick to it. If you do not understand the strategy then you will not be able to determine when something is going wrong and what the problem is.
The currency pairs that you trade will be related to the strategy that you are using and the time of day that you are trading in. There are certain currency pairs that work with certain strategies. You need to consider this and consider which currency pairs are liquid when you are trading.