4 Disadvantages of Not Having a Forex Trading Plan

If you don’t have a forex trading plan, you might as well be shooting yourself in the leg. Forex trading can be successful for you if you have a forex trading plan. Most forex traders do not have a plan, yet they wonder why they aren’t doing well at all. The truth is that if you think that you don’t need a forex trading plan to succeed in forex trading, then you are either joking or making a big mistake.  The disadvantages of not having a decent forex trading plan are many. But the more common and obvious ones include the following:

Forex Trading Plan

Increased Losses

Unlike the traders that already have a plan those without a plan are generally at the risk of increased losses. They tend to make way less than those who have a plan and a strategy. This is because a plan ensures that you have a risk level that you can tolerate. So, when all other forex traders are pulling out of a trade, you can stay in the trade and weather the trend until it rises again in your favour. Those who can’t will typically lose all the money or a considerable part of their investment.

Emotional Trading Resulting in Greed

When you don’t have a plan, you will get blown everywhere. People with plans generally tend to get less emotional when trading; they don’t get greedy or exceed their targets unless they are absolutely sure that taking the risk is worth it. When they make their benchmarks or products, they naturally exit the trades regardless of how pretty and favourable the market might look. Those without a plan on the other hand will start trading with their emotions instead of with their heads. Sadly, emotions and money don’t mix properly, so they tend to lose a lot of money from either trying to follow a false trend or pull out of a seemingly ugly market situation.

Not Being Confident

A forex trading plan helps you stay confident of the market even when the trade may not be going your way just yet. Not just that, you can also easily follow an upward trend for a long time. Unlike other forex traders who think the trend will fall sometime soon, you can to a large extent predict just how far up the trend is going and how long they are going to stick with it to make the profit they have in mind. This confidence often comes from doing your thorough market research and being confident in the data that you generated during your research.

Low High Quality Trades

Did you know that if you execute two high quality trades within a week, you could generate anything from $2,000-$10,000 in profits depending on your premium? This often outweighs the smaller, low quality trades. Without a forex trading plan, you will have fewer high quality trades and profits subsequently.