What Is Your Trading Plan?

We have seen insane price moves in the Forex market (as well as every other market) and it would be easy to just “jump in”.

When price is moving at a rapid pace, many traders just think of shorting (or buying) the strong moves.  That is not a good idea.

You always need a plan.

Missing Big Price Moves

In my recent free currency setups, I stated I was looking for a short in the USDCHF currency pair.  I could get into “flight to safety” (USD) and other reasons however I just looked at what the chart tells me.

USDCHF

USDCHF

Price rallying into former support after a complex pullback and a momentum impulse move, is the technical “right call”.

Would it have been easy to look at the last few prior days, see the green, and look for longs?  Sure.  Clearly some did as price rallied higher.

But that was not my plan.

I stick to my plan.

What Is The Trading Plan?

I like to use other price patterns to enter other patterns.

In the case of a rally in price, I like to see a range and then a test of highs (when looking shorts) for an entry.  Yes, I have other entries I will use such as the 2B reversal and even trend line breaks.  You can also look for a break of lower time frame support and a pullback.

In the case of the USDCHF, I got none of those which keeps me out of what would have been a losing short trade.

Would I consider longs?  Yes!

I post these setups on the weekend and even in the best of times, setups change as price evolves.

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But one thing that does not change is the need for a setup and a trigger.  Price roaring in the opposite direction IS NOT  setup or entry.

It is a fools game to just jump into a trade.

In the case of this FX pair, it was simply a pullback setup that failed due to momentum stepping into the market.

Have A Repeatable Trading Plan

Everything I do, is repeatable.  Long time visitors to my setups have not seen me change my approach to suit the market (or to make myself look great!).  Everything I show, you can see on your charts. I hide nothing.

We are in some crazy times and if you are still trading, it can be too easy to get careless with all these large moves.

Heck, you being careless may actually make you some money!  But the overall cost to your long term success will be damaging.

My plan for setups is simple really (trust me, the magic is not in the setups!)

  • I like to see momentum moves, pullbacks in price, price basing at previous lows and highs and even at momentum lows and highs
  • I need a trigger into the trade.  It could be the same pattern (flags, ranges) on lower time frames.  It can be a different pattern:  range breakout on lower time frame to enter higher time frame pullback.
  • Maximum risk per trade levels.  Maximum overall risk levels.  Circuit breakers

In fact, what I do is so simple many think it does not work.

It does.  I communicate with several traders who put my trading to shame.  They use a very simple approach to trading and yes, one even uses a crossover of moving averages!

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Are Trading Indicators OK To Use?

The edge you are looking for is in risk and managing trades.  There are a few indicators that have value:

  • Keltner channels to show when price is stretched from an average price
  • Momentum indicators to objectively see an increase in volatility
  • Moving averages to objectively measure a trend or a range

There are many people making money with vastly different trading strategies.  This should be a huge clue to you that it is not just your trading setup and entry criteria.

Complex sells.  People think you need complex to make money.  That is not true.

This is beyond the scope of my main intention of this post but….stop searching for a perfect strategy.  Stop searching for a win loss ratio of 60% or better.  That is not where the magic happens.

Take this time, when markets are in this state, to test out some of your own ideas.

 

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