With the plethora of advertising about Forex Trading chances are,
you have tried your hand at a demo account by now. Odds are you have made a
handsome profit, jumped onto the bandwagon of “Forex Trader”.



The
improbable overnight Millionaire Dream
leads many to an addiction to Forex Trading.



Question:



 How is your first Real(Live) money account doing today? 



In my
experience:



  1. 99.99% amateur forex
    traders lose money on their first,second 
    & third deposit.
  2. By this time
    majority will quit forex trading, their pockets can't sustain further
    drawdowns.
  3. 1% will double
    or triple their deposit and look to Revenge Trade, use excessive leverage
    and be washed out for the final time with a bad taste in their mouths.


 



Recognise:



 



A lot of Forex Internet wisdom centres around:



"Plan
your Trade, Trade your Plan." Wise advice.



1- How do
I make a "PLAN"?



2- How do
I know its the right "PLAN"?



I have never received a straight forward answer to these questions.



Think about it, these question are not complete.(Different people
different lives)



This article will try to guide you to the start of your plan and
push you to ask the correct/complete questions.



The Holy Grail is:



Without the right questions, the
answers will always be wrong.



 



STEP 1 - FACE
FACTS: Beating the cycle



 



1. Take a seat, Pull
up your daily trading history



2. Pull the charts
back to the time of trade execution(Open), list the following:



i)   3
Reasons why the trade was taken?



ii)  What is the
Risk-Reward ratio of the trade?



iii) What is the Loss
in terms of percentage of your Starting Capital?



Congratulations!
You now have information about your trading style.





NOW WE GET TO THE IMPORTANT PART:



Which are the correct
complete questions
need to answer using the above:



Assumptions:





Trader Type: Beginner            No. of
Trades: 100





1-     
Were you gambling?



Any trades:



a)     
Without Reasons



b)     
No Stop-loss or Take-profit
information



c)     
Leverage used makes the SL hit
more than 5% of Capital.



Any of the above should be classified as
Gambling.



How to break this habit?



Self-discipline is the hardest part of becoming a Trader.

For an amateur, the best way to get out of the Gambling habit is:



i)                   
Enter a trade only after
listing:



Reasons behind the trade, Risk-reward, Effect
on capital

Do this with a pencil and paper. It will immediately reduce the number of such
trades.

A physical Trade Journal is essential for beginners and recommended for all.



Remove all profitable Gambling trades from the data.





2-     
Was the Trade Size correct? 



Some trades in the Loss column will have:



i)  Correct reasons

ii) Stop-loss and Take-Profit(Risk-Reward) – Perfect

iii) Size of Trade – INCORRECT



This is the most frustrating of all losses, the position was profitable but the
Trade size made it impossible(Margin call) to hold till Stop-loss.



When starting out:



Decide Maximum Stop-Loss value in USD terms.



Based on the above:



Decide Maximum number of Open Positions at any point of time

Decide Maximum Position size





This is the Starting point of your Plan. Make
a List of questions – answer them yourself. The next part will start with all
the essential questions and a dissection of the various answers along with the
NEXT STEP:





Disclaimer: Everything is based on my experience.