Once you’ve become an active trader, you have a lot of experience under your belt. You’ve had time to study, learn and play around with your trading plan. You spent hours upon hours preparing your strategy that correlates with your trading style. Then suddenly you get a wild hair and consider making changes to your trading plan.
The question is “Why would you?” If you have a trading plan that is tried and true, is it wise to change it? There could be reasons for or against it, depending on how your plan has been working for you.
While there are exceptions, the rule of thumb is to stick with your trading plan. Not at all costs, of course, but in general. Where does the discipline come in? It’s with making sure your plan is good for you in the first place. Hopefully you studied the market well, follow trading gurus and keep current with all the news that is coming in.
With all of that going for you, you were able to construct your own trading plan.
But where might it have gone wrong? Are you noticing cracks in your plan and you want to make slight changes, or start over with a new plan? No matter how well you researched the forex market before you began trading, you can always find places to tweak your system to make it better. Adjustments are part of the game, but choosing a new trading plan is not.
Steady Your Emotions
All traders go through highs and lows, winning streaks and losing streaks. But a losing streak is not a reason to change your trading plan. It has served you well in the past, right? Be very wary of becoming emotional after a loss or two and resist the urge to throw your existing plan out the window. You have a lot of experience, time and research invested in your plan.
Take advantage of everything you have learned.
Build on your plan and make positive changes so it’s more relevant to your trading style, but don’t do it on a whim. Be calm and collected as you study the charts and go over your wins and losses. Don’t let emotions trip you up here.
Rely on Your Trading Journal
Your trading journal is your key to monitoring your trading style and plan. This is where you should focus your attention. If you are very careful and take the time to write down every trade, you can go back over them each day to see what went right or what went wrong.
Your trading journal is your best friend if you take detailed notes regarding each and every trade you enter and exit.
Make notes regarding the market conditions, the direction the charts were heading, when you jumped in and out, and how it turned out. From these notes you can tweak your plan to the point that it perfectly defines how you should be trading.
You’ve put so much work into this! Rely on your own experience through your trading journal and don’t give way to fear or stress.