7 Unwanted Results of Not Having A Forex Trading Plan

 

Many people, businessmen, companies and individuals are drawn to Forex trading for the many promising rewards it offers to traders and investors who succeed. Before having the impressive fruits, of course, the benefits of Forex trading are also its magnetizing features. They are truly amazing like no other kind of trading is. Nonetheless, you cannot simply triumph here without making smart decisions and necessary efforts. It’s not as simple as salestalkers say. You cannot come unprepared. You need the right strategies and tools. Begin by having a Forex trading plan.

A lot of Forex traders fail here. This is probably one of the first mistakes that traders often commit at the beginning or even in the middle of their trading pursuit. What is it? Failing to come up with a well-thought Forex trading plan. Yes, it’s one of the surefire ways to lose in Forex.

As its name implies, a Forex trading plan is composed of your plans, preparations, formula and tactics to execute in the Forex trading proper. It’s your game plan in this serious business. Like a programme, you follow your trading plan while trading Forex and move accordingly. If you don’t have a plan, it’s easy to lose or to raise the white flag.

Not every trader realizes the great value of a Forex trading plan until he/she experiences the consequences of setting it aside. Well, you don’t have to encounter them first-hand to learn and realize its importance, right? Being informed and knowledgeable will help you with that. Read below the 7 unwanted results of not having a Forex trading plan.

 

1 - You might just be gambling.

A huge misconception about Forex trading is that it’s equal to gambling. The truth? It’s not. But if you trade Forex wrongly and without a plan, you might just be gambling. Forex trading is not gambling, but you yourself might turn your supposedly organized moves into blind bargains.

In gambling, you just take risks while merely relying on pure luck. Meaning, there’s no guided speculation and no expert coaching applied. Being the exact opposite of Forex trading, you don't clearly study and invest time to analyze data when you’re gambling. And without a trading plan, you might just be gambling.

 

 
2 - You won’t have updated knowledge about relevant economic news.

 

Writing a Forex trading plan is crucial indeed because it’s where and how you take the first few steps before actually finalizing every trade. This is the time when you gather significant information, do your research and spend time and energy on plenty of reading.

Just imagine if you skip this essential step before trading. You won’t have updated knowledge about relevant economic news. As a result, it will be hard for you to determine the best trading actions to use since you’re not familiar with the current data reports that affect your trade and the Forex market as a whole.

 
3 - Chances of losing trades are very high.

 

For sure, you’ve expected this to be here. Of course, having no trading plan sets you in a dangerous zone. If you don’t train and learn well and consequently, don’t make a trading plan, that means you have an unclear Forex career ahead of you. It’s like you’re just going to go with the flow, and that’s totally bad. Your chances of losing trades are very high, and you shouldn’t be surprised at all if in the first place, you did not make an effort to plan your trades out.

 
4 - You will lack risk management measures.

Anyone can anticipate losses when a Forex trading plan is nowhere to be found. What makes that worse though is that you will lack risk management measures as well. Because you did not accomplish your assignment of formulating a trading plan, you will experience defeats or at least, some hurdles along the way.

If you face a manageable hurdle or an escapable problem during the trading period, yet you have no trading plan, you’re most likely still defenseless. Instead of having a list of plans B, C, D and so on, and a set of hazard management measures, you’re at a loss and soon to suffer a trading loss.

 
5 - Comparing effective and ineffective trading strategies would be difficult.

 

A Forex trading plan helps you keep track of your methods and behaviors while doing the business. You’re listing down what to do in your upcoming trade and also what you did last trade. It may serve as your monitoring tool to guide your trades in the future.

Without this, comparing effective and ineffective trading strategies would be difficult. Say you just finished trading yesterday, and unfortunately, you lost. Common sense, you will make a plan again, considering how to improve and not re-use the approaches that made you lose. In short, you will craft fresh plans again. On the other hand, if you won a trade yesterday, naturally, you will take note of and record that plan that made you win. That means you might use it again next time since it was just proven that it works profitably.

See, if you don’t own a trading plan for this purpose, then you won’t be able to create a variety of plans, and you might utilize inefficient strategies, when actually, you’re supposed to modify or dump them.

 
6 - Emotions take over traders.

 

Not many duly believe, but emotions take over traders when there’s no Forex trading plan to assist, enlighten and remind them of the maneuvering they must take. Greed can easily overpower you if your attention is distracted away from the right trading actions. Lack of confidence can bring you down.

A trading plan can always bring you back on track whenever you’re tempted to take another road that’s not part of your sure and detailed plan. Even when your focus is stolen by scenery, you can move again to the right direction when a map is in your hands. Zero planning leads to taking impulsive trading routes, which is very risky.

 
7 - You cannot trade confidently.

When there’s no trading plan, there’s no certain blueprint to follow. It’s like you’re going to war without a weapon. You cannot trade confidently if that’s the case. You don’t know whether or not what you’re doing is right or will cause good. You’re not sure what you’re doing and what you’re supposed to do, so you will feel hesitant and scared. Remember, the more knowledgeable and prepared you are, the more confident you become.

PLAN TO TRADE

As the famous quote goes, “If you fail to plan, you plan to fail.” The same thing applies to Forex trading. You need to study, to analyze, to decide based on evaluations and to design a plan for you to trade properly and profitably.

Forex trading is not gambling, so you cannot just guess and take baseless risks that will make you lose money. Here, you speculate based on your observation and assessment. This is where you take note of your courses of action in case your trades or the market moves differently. Furthermore, this trading plan consists of strategies not just for the start of the trading journey but until the end. No question, a trading plan is a must.

About The Author: Nicole Ann Pore is a writer, an events host and a voice over artist. Quality and well-researched writing is her worthwhile avenue to enlighten and delight others about things that matter. She is a daytime writer for FP Markets, one of the leading forex brokers in the world. Nicole graduated Cum Laude from De La Salle University Manila, Philippines with a Bachelor’s Degree in Communication Arts.