A Forex trading plan is a series of acts and omissions for the purpose of positioning oneself for maximum profits at regular, preferably short intervals, and with minimal losses. Of course there are several trading plans to choose from. Some of these plans are basic, some are complex, and others are even hybrids. This article will discuss three specific types of trading plans, short term, midterm, and long term.
Short Term Trading Plans
Detractors would have you believing that short term is equals to speculation, which is risky and often times costly. This is however not the case because speculation relies solely on principles and techniques that are profounder as true with little or no basis whereas short term plans do have a fast turnover rate but the same is based on sound economic principles and well researched raw, usually historical data.
There are of course dozens of short-term trading plans. The best way to go about this is to properly research the propounded trading pattern. You can make use of practice accounts using actual historical data as your basis, or you can go live to test the waters. The important thing is to go slowly at first until you determine the effectiveness of the plan.
Midterm Trading Plans
Midterm plans last several days or even weeks. The main advantage of this approach is that you get more data, have time for more analysis without tying yourself down in the long run to a specific currency pair or commodity. This is especially helpful for meticulous beginners who want to experience several trades and do not have enough liquid assets to bury into long term Forex plans.
Long Term Trading Plans
This type of trading plan has the most advantage but requires more capital investments. Beginners who have absolutely no idea what they are doing should stay away from long term trading for the time being and concentrate on midterm trading for a few days or weeks. This is because log term forex plans usually require complex data gathering and analysis plus a heavy investment of capital in order to be viable or practical to a regular nine-to-fiver.
Forex Accounts Trading Plans
As mentioned earlier you might want to brush up on your basic knowledge and technique before doing a live trade. A few years back the only options were via trial and error with actual money or classroom discussions plus examination. Nowadays one can make use of Forex accounts with practice accounts. This allows a relatively inexperienced trader to take historical data as well as past results in order to test how effective on is at trading or how accurate one is at selecting and then reading indicators. For those who are on a tight budget a demo account is usually available for free for a limited period of time. The user can then jump from one demo account provider to another or stay with one paid account.
Regardless of the trading plan due diligence must always accompany everything you do. This means proper education, extensive training, plus experience. Last but not the least, as close to real time data as possible.