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This is why having a trading plan is so important

In this video:
00:35 – Client makes +6.82% return in 2 weeks by sticking to his trading plan
01:20 – Trade specifically the way that suits you
02:02 – Create rules around your trading
02:45 – Trade results show consistency and profit
04:00 – 12 trades taken and 11 were winners
05:15 – Get on my free weekly webinars

Have you ever wondered if a trading plan really does work? Well, I’m here to tell you it does, and I’ve got proof right here. Let’s talk about that and more right now.

Andrew Mitchem: Hi Forex traders, this is Andrew Mitchem here, The Forex Trading Coach, Today is Friday the 5th of February. I want to talk about trading plans and trading goals again, because a couple weeks ago I covered that at the beginning of the New Year, and I expressed how important I believe it is to have a trading goal and a trading plan.

Client makes +6.82% return in 2 weeks by sticking to his trading plan

Now, it just so happens that this morning I opened my emails and I’ve had an email from Paul who’s been a client for just over two weeks. He said to me a number of things and it just backs up why having that plan is so important. By the way, before we get into it, Paul has made, on two accounts 6.82% in the first couple weeks since he’s been with me, so we’ll talk about those specific trades shortly.

Just to read and quote some of the information that Paul said. He said, “Look, I’m taking it really slowly, only putting on trades that I have a high level of confidence in. I can tell you right now that I’m a one-hour chart trader. I use the lot size calculator, and I’m extremely strict with money management.” That’s the first outline. No specific plan here, but just the outline.

Trade specifically the way that suits you

He then goes on to say and explain about he’s only taking trades initially on one-hour chart trades. He’s leaving the trade on for an hour, seeing how they’re going, and then after one hour he’s then making a decision about moving stop-losses if the trade’s moved up into profit. He’s telling me exactly about what he’s also looking potentially to add to a position if the trade’s already in good profit, of what factors need to be in place to justify adding to a position, or just moving the stop-loss up, protecting the trade, and riding it to the full profit target.

He also mentioned that over time he’s looking at, and this is probably in about three months time, going to add weekly charts, daily charts, and four-hour charts to the existing time-frames, which is just the one-hour chart trades.

Create rules around your trading

He also mentioned here some rules that he’s sticking to, and as an example, “I’m never gonna trade anything lower than a one-hour chart,” so that’s one-hour chart and above are the time frames that suit Paul. “I’m never gonna risk more than 1% of my total capital on a single trade or on a correlating trade,” and “Under no circumstances will I enter a trade based on hype, gut feeling, or news.”

Now, there’s some other rules that he’s got listed here which are more specific to my course on trading strategy so I won’t actually mention those right now in the video. Just to really let you know to outline really what Paul’s done as he’s got specific rules and he’s sticking to them.

Trade results show consistency and profit

Now, what he’s got down here he essentially mentioned in terms of Pips, not so much the return from the trade, but just to read out from one account here. He’s taken a sell trade, Canadian – Yen, 82 Pips, another buy trade Euro – Aussie 26 Pips. Another trade here 32 Pips, 12, 8, and another sell trade Australian dollar – Japanese Yen, currently running 114 Pips. I’ve moved my stop-loss up and I’ve locked in 50 Pips of the trade. In total I’ve placed six trades. They’re all winners on this account, and I’ve increased my account by 5.3%. That’s one particular account.

On the second account here, he’s placing half of 1% on that particular account and, again, 68 Pips, 24, 3, 24, 14, so quite small in terms of the number of Pips, but, actually, it’s the return that he’s taking from the trades which are the best thing. On the second account six trades, five winning trades, one loss, increased my capital by 1.52%.

What does that tell you? Well, really it tells you that with very low risk and with a controlled amount of setups in terms of like … All up here we’ve got six on that account and another six on that.

12 trades taken and 11 were winners

So 12 trades in total is all he’s taken over the two weeks, but he’s actually selected them. They have everything stacking up in terms of high probability at the time of taking the trade. They’re all on one-hour charts. He’s monitoring the trades for up to one hour. He’s then saying, “Well, is this trade actually gonna continue in my favor or not? Yes, do I move the stop-loss up? Yes or no? He’s having a plan, and rules, and sticking to it. It’s just outstanding to see that happen.

That’s it in terms of the trading information. Today we’ve got the non-farm payrolls, the monthly U.S. employment figures out of the U.S., so it will be interesting to see what’s happening there. As I’m looking at my charts right now to make this video and podcast, the U.S. is looking very weak. It will be interesting to see if that then comes through into the performance from the non-farm payroll figure. I’ve just returned from two weeks away. I’ve been over in Hong Kong, as you’d have seen on last week’s video, and also I spent the last week in the Philippines. Just returned from a 28-hour trip to get back to New Zealand. Although it’s not that far on a map, it’s taken a long, long time to get back here.

I’m back into trading now, so if you have any questions for next week’s video and podcast, email me [email protected].

Get on my free weekly webinars

Don’t forget, if you’ve not been on my free weekly videos there’s a video for new traders and also one for the more experienced trader. If you’ve not been on them, definitely jump onto one of those next week.

Have a great weekend, and I look forward to bringing you more trading news and information this time next week. This is Andrew Mitchem from The Forex Trading Coach.

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