Writing a Trading Plan

In gold trading there is no single technique or formula that is used for trading the market successfully. The market requires traders to learn & acquire the skill required to trade the market successfully. Traders need to learn how to analyze the market movements. Traders then need to come up with a plan of how to come up with a way of combining this knowledge and the trade strategies they have learned so that to formulate their overall 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 with a business plan also successful traders must 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 should specify the 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 practice after which they will choose the instrument that produces most profitable results. Trader will then list this financial instrument on the plan as the 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 a trader may find that the best chart time frame for their system is the 15 min chart time frame and therefore they will specify their chart time frame as the 15 minutes chart time frame.

The chart time frame which a xauusd trader chooses will depend on the type of trader they are. For day traders who have a lot of time to watch the charts they can choose the 5 minutes or 15 minute chart time frame & trade with these trading charts. For swing traders who don't have a lot of time to watch the market they can trade with the 1 hour chart time frame so that they can be able to follow the medium term trends that will last for a one or two days.

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

Trading Strategy

This section will specify the system that the trader will be using to trade the market. This section will listing the rules that a gold trader will follow when opening a buy/sell trade transaction. It also will listing the rule that a xauusd trader will follow when closing their trades - for example it will note the take profit levels as well as stop loss levels which a gold trader will set after they have opened a trade position.

The trader will writedown if they will be using an technical indicator based system to generate signals or the trader will write if they will be using support and resistance levels to open & close trades or any other method that the trader will be using for trading. For examples a trader might specify that they will be using automated gold systems & they'll writedown the parameters of the automated bots on this section.

Before writing the trade system that a xauusd trader will be using, the trader will have back tested this system on a practice practice account until the time that the system is producing profitable trades on a consistent basis and after coming up with a profitable system the trader will then write down the system on this section of their plan.

Mindset

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

Discipline - This will listing that you'll be disciplined enough to follow the rules of your trading system & plan. Discipline will mean that you will be patient enough to wait for a signal from your system before opening a trade. This section will specify that you will only trade the signals which are generated by your system & you'll not second guess your trading system and open trade positions which are not indicated by yourtrade 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 should always trade based on the rule of your plan. Avoid becoming greedy and wanting more profit from the same trade instead of closing the trade at your takeprofit level.

Gold Capital Management

A trader must specify their money management guidelines that they will use when trading. For example 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 two times what they set their stop loss level. This will make their strategy more profitable in the long run because they stand to make more money from their winning trades and lose less money from their losing trades.

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