Flexibilty in Your Trading Plan

Trading plans need constant degree of flexibility depending on the previous success or failure of the trades. There are various ways to size a position according to the total equity-simple as well as sophisticated. The easiest of them is not to use any more than 1-2% of the total equity, like discussed in one of the previous posts on risk management. A series of successful trades can let you gradually increase the position size. One of best recommended approaches is to establish the equity and keep the trading “within the means”. Taking too large a position and losing significant amounts on it can always be avoided. Losses lead to shrinking of each subsequent position.


Trading plans also need constant modifications because of the highly volatile nature of the Forex market and its conditions. Trading success is thoroughly determined by planning as well as constantly amending the plan for the better. We really need not carve out the trading plan on stone-the plan must be consistently made better. Here also lays the trap most novice traders get caught into. Changing the plan on very short term conditions can lead to severe results.


The catch is this-trading rudiments need to be robust.That trading plan is the best which can survive the random market changes with some degree of flexibility but that doesn’t need to be reconsidered on every other trade.