Writing a Plan
In there is no single method or formula that is used for trading the market successfully. The market requires traders to learn and 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 strategies they have learned so as to formulate their overall method.
By coming up with an effective trading plan your success will improve significantly. A 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 starting to trade the 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
XAUUSD Instrument
The first section of a plan will specify the xauusd that a trader will be trading. Traders should specify the xauusd that are best suited for their trading method.
Before deciding the most suitable xauusd to trade a trader will have taken time to test their strategy on various xauusd on a demo practice after which they will choose the xauusd that produces most profitable results. The trader will then list this instrument on the trading plan as the xauusd that they trade.
Chart Time Frame
The trader also will have to specify the time frame they'll be using to trade with. For example a trader may find that the best time frame for their system is the 15 min time frame & hence they'll specify their time frame as the 15 minute time frame.
The chart timeframe that a 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 select the five minutes or 15 minutes chart timeframe and trade with these charts. For swing traders who do not have a lot of time to watch the market they can trade with the 1 hour chart timeframe so that they can be able to follow the medium term trends that will last for a one or two days.
XAUUSD scalpers on the other hand can trade with the 1 minute chart timeframe and trade the short term market moves. These traders will make many trades during the day & just like day traders they will also have a lot of time during the day to watch market moves.
Gold System
This section will specify the system that the trader will be using to trade the trading market. This section will listing the rules that a trader will follow when opening a buy or sell trade. It also will listing the rule that a trader will follow when closing their trades - for example it will note the take profit levels as well as stop loss levels that a trader will set after they have opened a trade.
Trader will write-down if they will be using an technical indicator based system to generate signals or the trader will write if they will be using support & resistance levels to open and close trades or any other technique that the trader will be using for trading. For example a trader might specify that they will be using automated systems and they will write the parameters of the automated robots on this section.
Before writing the system that a trader will be using, the trader will have back tested this system on a demo 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 trading plan.
Mindset
This section will specify the mindset that you will be following when trading so as to ensure that you become successful when trading.
Discipline - This will list that you will be disciplined enough to follow the rules of your system & plan. Discipline will mean that you'll be patient enough to wait for a trading signal from your system before opening a trade. This section will specify that you'll only trade the signals that are generated by your trading system & you'll not second guess your trading system & open trades not indicated by your trading system.
Trade Without Emotions - when it comes to trading the market you shouldn't let the emotions of fear & greed control you when you’re trading. You should always trade based on the rule of your trading plan. Avoid becoming greedy & wanting more profit from the same trade instead of closing the trade at your take profit level.
Gold Money Management
A trader must specify their equity management rules that they will use when trading. For example a trader can specify that they will use a high risk: reward ratio which means they will place their take profit 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 & lose less money from their losing trades.
