Writing a Trading Plan

In gold trading there's no single method or formula that is used for trading the market successfully. The market requires traders to learn & acquire the skill required to trade the markets successfully. Traders need to learn how to analyze and interpret the market movements. Traders then need to develop a plan of how to come up with a way of combining this knowledge & the trade strategies they have learned so that to formulate their over-all trading method.

By coming up with an effective plan your success will improve greatly. A gold plan will help you to effectively analyze the market and know when the best time to open a trade is and when it is best to close the trade.

Before beginning to trade the trading you must be prepared with a plan. Just like in business where all successful businesses start & begin with a business plan & also successful traders must also start with a plan.

Sections of a Plan

Chart

First section of a plan will specify the instruments that a trader will be trading. Traders and Investors should specify the trading instruments which are best suited for their method.

Before deciding the most suitable trading instrument to trade a trader will have taken time to test their strategy on various charts on a demo after which they will select the financial instrument that produces most profitable results. Trader then will list this financial trading instrument on the plan as the financial instrument that they trade.

Chart Timeframe

The trader will also have to specify the time frame they'll be using to trade with. For example illustration a trader might find that the best chart timeframe for their system is the 15 min chart timeframe and hence they'll specify their chart timeframe as the 15 Minutes timeframe.

The chart timeframe which a xauusd trader chooses will depend on which type of trader they are. For day traders who have a lot of time to watch the charts they can select the 5 Minutes or 15 Minute chart timeframe & trade with these trading charts. For swing traders who do not have a lot of time to watch the market they can trade with the H1 chart timeframe so that they can be able to follow the medium term trends that will last for a one or 2 days.

Gold scalpers on the other hand can trade with the 1 min chart timeframe & trade the short term market moves. These traders will make a lot of trades during the day and just like day traders they also will have a lot of time during the day to watch market moves.

Strategy

This section will specify the trading strategy that the Gold trader will be using to trade the markets. This section will list the trading rules that a gold trader will adhere to when opening a buy/sell trade transaction. It also will listing the rule that a gold trader will follow when closing their trade transactions - for example it will note the takeprofit levels and also stop loss levels which a gold trader will set after they've opened a trade.

The trader will writedown if they will be using an indicator based system to generate signals or the trader will write if they will be using support and resistance levels to open & close trade positions or any other method the Gold trader will be using for trading. E.g. a trader may specify that they will be using automated gold systems & they'll write-down the parameters of the automated bots on this section.

Before writing the trade system that a gold trader will be using, the Gold trader will have back tested this trading strategy on a demo practice account until the time when the trading strategy is producing & generating profitable trade transactions on a consistent basis and after coming up with a profitable system the trader then will write down the system on this section of their plan.

Mindset

This section will specify the mindset that you will be following when trading so that to ensure that you become successful when trading.

Discipline - This will list that you will be disciplined enough to adhere to the strategy rules of your trading system & plan. Discipline will mean that you will be disciplined and patient enough to wait for a trade signal from your strategy before opening a trade. This section will specify that you will only trade the trading signals which are generated/derived by your system & you'll not second-guess your trading system & open trade positions which aren't indicated by your trade system.

Trade Without Emotions - in trading the market you shouldn't let the emotions of fear and greed control you when you're trading. You as a trader should always trade based on the written down rules of your trade plan. Avoid becoming greedy & wanting more profit from the same trade instead of closing the Gold trade at your takeprofit level.

Gold Capital Management

A trader must specify their money management guidelines/rules that they will use when trading. For example illustration a gold trader can specify that they'll use a high risk to reward ratio which means they will place their take profit order level at 2 times what they set their stop loss level. This will make their strategy more profitable in the long run because they stand to earn more money from their winning trades and lose less money from their losing trades.

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