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Friday, January 04, 2013
A Forex Business Plan Is Not Your Trading Plan
Without a doubt, most people trying to learn to trade Forex spend most of their time learning strategies and systems. The truth is, the majority of the time is spent on trying to find entries to the market. From a traders viewpoint, there is a lot more to profitable trading, like money management and sticking to your trading rules. Learning entry strategies is only a fraction of what you need to learn to trade profitably.
If you don't have a trading plan that covers every element of successful trading, you should spend some time to create one. Your trading plan is "how" you trade and what the rules are for getting into and out of the markets. But don't confuse this with a Forex business plan.
Treat Your Forex Trading Like A Business
The number one thing you must do is start looking at your currency trading as a real business. Undoubtedly, you want to trade Forex to profit. You are investing money and time, and you want to make a return on that investment. Therefore, you must have a plan to figure out what you want to get out your trading, how long it is going to take and what steps are necessary to systematically achieve your goals.
Think of it like this. If you were planning a trip you would make a plan. You would figure out how many miles away your destination is, how fast you can travel on the roads and what detours and problem areas you are likely to run into. With this knowledge, you can accurately predict how long it is going to take to reach your destination and what you should expect on the trip. A Forex business plan is much like planning a road trip.
Elements Of A Successful Forex Business Plan
The basic, essential elements of your business plan are your starting balance, how much you expect to gain on average every month and a final income goal. This gives you a stating point and an ending point. You'll also need answer "how" you are going to achieve this average monthly goal, either by trading the markets yourself or subscribing to a signals service provider.
I believe one of the reasons people fail to build business plans for Forex is they don't know what their expectations should be. Not being profitable traders already, they don't know what kinds of gains are realistic. Therefore, they skip making a plan. They don't know what returns they should expect and are unable to calculate how long it is going to take to reach their goals. Ultimately, this leads to failure.
To create a realistic and achievable Currency Trading Business Planner, I've created some free training to help you out. I provide the guidance needed so you can align your expectations with reasonable goals. I also provide a spreadsheet that helps you determine your "life changing income" and how long it will take to achieve your Forex trading goals. Upon completing the free training, you'll have a Forex Business Plan in hand.