All rise! Trading plan is now in session! Commander in Pips: So, we’ve answered all of our preliminary questions – how much time we can spend on trading, will we intend to trade long-term or short-term, and what our goals are. Next we create an approximate business plan for start trading as a business. Let’s try to develop a trading plan. Initially, since you’re new to markets, it’s better that your trading plan will not be too extended. Later, when you will start to get more and more experience your trading plan will become sharper, more definite and strict. But let me to offer you some ideas that could be a starting point. Based on these questions you will be able to create your first trading plan: 1. Define currency pairs, that you would like to trade, or markets if you suggest to trade at some others; 2. What particular setups do you intend to trade. For instance, you might say – I will trade MA trends, or Harmonic patterns (all or some particular ones) or classical reversal patterns, I think you’ve got the idea; 3. Specify entry point that launches the trade. For instance, Butterfly 1.618 extension target, AB=CD in Agreement with Fib resistance, crossing on neckline of H&S patterns – anything. If you apply the method of some mentor or well-known trader you will use entry/exit rules that were specified by him/her. Usually mentors describe the way and signals of how to enter and exit the trade; 4. Determine the market conditions that void the trade. Some unwelcome signs near your potential entry point. For instance too fast of a CD leg at AB=CD pattern, or a gap right at the 1.618 target of a Butterfly. By seeing these conditions you must not enter the trade; 5. Specify your trading lot volume on Forex, or number of shares, contracts etc.; 6. Specify your money management rules – how much risk you can take in each trade. This point is linked with previous one and next one; 7. Define the algorithm of stop-loss order placement. Usually the technique of stop-loss placement tightly corresponds with the system that you will use in trading. If this is Fibonacci – beyond the levels, if this is harmonic patterns – beyond completion points, MA trading – breakouts, Elliot Waves Theory – wave swings, for instance wave overlapping, etc.; 8. Determine take profit targets and how you will move stop-loss orders. This is the same – it depends on the trading system. Use these questions and return to them again and again until this becomes second nature. They are suitable for any system that you will choose.