Trading Without a Plan
A lot of people new to forex trading will often switch off their computers on Friday afternoon or Friday evening after the markets close, and won’t look at their charts until the markets open again on Monday morning.
Some forex traders may be able to get away with this, but it is generally a much better strategy to go into a new trading week fully prepared if you are serious about making money.
How to Develop a Trading Plan
The best way to do this is to sit down in front of your computer on a Saturday or Sunday (when the markets are closed for the week), and look at all of the major forex pairs that you like to trade.
You can then identify key levels of support and resistance, and key areas where the banks and financial institutions are likely to drive the price higher or lower, if there is likely to be strong support or a strong breakout, for example.
Plus you can also assess how the price has moved in the previous trading week for all of the leading currency pairs, which will help you to make more accurate forecasts for the week ahead.
The Lazy Alternative
If this all sounds like too much hard work, or if you don’t really feel like devoting one or two hours of your weekend to looking at price charts, you could simply look at some of the weekly forecast articles that are provided by many of the most popular forex trading websites.
These will often make predictions based on previous trading action and likely areas of support and resistance, and will help you to make better informed trading decisions in the week ahead.
However there is no accountability for these predictions and they are only really a general guide, which is why it will always be better to do your own research and come up with your own trading plan if possible because this analysis can be combined with your own trading strategies to help you find winning trades.
When you know you are putting your own money on the line, you will slowly develop your analytical skills if you are doing this analysis every single weekend, and should hopefully start to see an improvement in your overall success rate as a result.
Final Thoughts
The point is that if you know where the key levels of support and resistance are likely to be well in advance, you will be in a much better position to take action when the opportunities present themselves during the week.
If you simply turn on your computer on Monday morning, you may not be ready to take action because you won’t know where the best places are to enter long or short positions based on your previous analysis, and will essentially be trading blind if you haven’t yet studied the charts.
Similarly, the price of one of the major currency pairs may break through a key level of resistance that has previously been tested several times before, but because you haven’t plotted this on your chart and didn’t make a note of it beforehand, you may well miss out on a high probability trading opportunity that you would otherwise have spotted.
Of course if you are just scalping the 1-minute charts, for instance, then it probably isn’t necessary to do a weekend trading plan, but if you are trading the 15-minute, 1-hour, 4-hour or daily charts, for example, then a weekly trading plan could really help your trading and help you to become a lot more profitable.
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