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Forex trading or investing in stocks is the same as owning a business

By Edited Jul 29, 2015 0 0

Stock trading is a business and you need to have a business plan just as if you were starting a new company. You need to have a written trading plan to have your business successful financially. You should not ignore have a trading plan just because you don't have hundreds of thousands of dollars invested. If you have a smaller trading account then its mandatory to have some kind of investment plan before you start trading. With a smaller account you don't have much room for loss until your trading account can go debit. Part of the plan should be the use of stop losses to preserve capital.

All the major stock or forex brokers should have software available or on site systems to help set up some kind of money management plan. Take the time to learn and keep it up to date at least on a weekly basis. If you have made trades during the day make sure to update your trading plan when the markets are closed. Make sure you set rules and stick with them. If you decide not to risk more then 20% of your account on a trade you must stick with it. Don't change your plan out of emotions or fear of losing this is a mistake.

Take a look at experienced traders and devise some of your investment plan from what they do. If you are trading the forex market it is essential to have a plan in place. When to take a trade based on what indicators you are using should be a big part of the plan. Losing traders let their emotions get to involved and deviate from what trading strategy they have set up.

Emotions can have a negative effect on your trading that's why you need to stick with what you have written down especially if trading the forex markets. If you have set targets and stop losses that you have set then you need to use them and not let yourself get caught up emotionally,this will only cut into your profits. When you take emotions out of your trading you will see your profits rise and your losses reduced. Pulling the trigger to make a trade becomes easy when you have a investment plan in place. The plan makes the trade sets the take profit and sets the stop losses. This makes everything automatic and keeps it as a business. Your fear and anxiety will start to fade away from using a good plan to trade with.

Some key points of your investment business plan should include some of the following. Take a look at yourself and decide why you want to start trading stocks or the forex market. Are you only interested in making money you should be careful with this as emotions can be a big problem. What are my weaknesses and strengths can I afford to lose some money. Can I set aside enough time to dedicate myself to this business?

What type of trading do I want to do swing trading, daytrading, long term trading? Am I comfortable trading stocks or the forex market? A big part of your plan should be knowing when and how you want to place a trade. You need to write it down and stay focused on executing the trades according to your plan. Study and become familiar with reading trading charts and set your plans accordingly.



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