Always Follow Your Trading Plan

Sam Evans

Hello once again Forex Market traders and regular readers of my article. Firstly I would like to thank all of you who emailed me in the last few weeks with your feedback on my article from 2 weeks ago: FX Trading Mind-Set 101. I am glad you all enjoyed the piece and that it got you thinking a little more deeply about your mental game and its impact upon your trading as well. At the end of that article, I promised to follow up with a topic on listening to what the market is telling you, a subject which most definitely requires a complimentary solid mental attitude at all times.

Before I go any further however, I would like to say a huge thanks to my good friend and fellow Online Trading Academy instructor Scott McCormick, for throwing this concept at me in the first place. On a teaching trip we did together last November in Charlotte NC, we were discussing different methods of teaching and he put the concept to me and I loved it from the very start. Thanks Scott! I hope I can do it the justice it deserves.

I would like you all to think back to the days when you first considered trading the markets and more importantly, the reasons why you wanted to embark on such a journey. For some people, they simply want greater financial security by generating regular short-term income or maybe they want to find a way to protect and grow their long-term wealth, or maybe even both? For others, it is all about having more time but one thing I have found to be a common theme amongst everyone, is that they love the idea of not having a boss. I must admit that this was one of the most attractive reasons for me personally. Now while being an independent market trader allows you to leave the 9-5 job and call your own hours, something that you really can’t get away from is that you still have to answer to the market.

People mostly don’t like being told what to do. Deep down I think we all understand that we need to follow some rules in our lives or there would be complete and utter chaos. However, while we follow rules in life we also like to be free to do what we want to do. Heck, I know I do. One of the most frustrating things about having a regular job is having a boss who is constantly telling you what to do. It then gets even worse when that boss tells you to do something that you know is wrong or that is likely to result in failure. I think we all have had to do that at some point in our working lives. It then gets especially hard when you do as you are told because you have to and because you want to keep your job, only to see things not work out for the better and your boss gets none of the blame and you do instead! Frustrating times indeed. No wonder people want to learn to trade the currency markets and be free from such situations.

When it comes to trading, having an opinion does not really matter in the long run. What really makes the difference in the long run is building a solid trading plan, developing rules, and then finally listening to the market to tell you when to take action. When the market says take action, then you had better take action. No matter if the trade turns out to be a winner or a loser, the key thing is to do what you are told and pull the trigger. You have a stop loss to contain your worst-case scenario and a profit target if the trade goes well. What more do you need to do but follow the plan, even if it feels a little uncomfortable. Let’s take a look at a recent swing trade I took on the GBPJPY which required me to listen and follow the plan:

swing trade on GBPJPY

Price had been in a decent upwards trend and was steadily approaching a quality-assessed Supply Zone, which offered me a solid setup and a strong risk to reward profile as well. Over time it does get easier and easier to short a rally (although most technical analysis theories would tell you not to), but I simply listened to market and placed my order in a set and forget fashion for an entry around 173.00 and a profit target around 168.00. Just about 1 week later the trade hit target as below:

set and forget example chart

Make no doubt about it, following your trading rules and listening for the signals from the market and nothing else whatsoever is not always the easiest thing to do but I have learned to do as I am told as my feelings are really inconsequential in the grand scheme of things. The only opinion that ever really matters at the end of the day is that of the market itself.

Take care and be well,

Sam Evans

This newsletter is written for educational purposes only. By no means do any of its contents recommend, advocate or urge the buying, selling or holding of any financial instrument whatsoever. Trading and Investing involves high levels of risk. The author expresses personal opinions and will not assume any responsibility whatsoever for the actions of the reader. The author may or may not have positions in Financial Instruments discussed in this newsletter. Future results can be dramatically different from the opinions expressed herein. Past performance does not guarantee future results. Reprints allowed for private reading only, for all else, please obtain permission.