business plan for forex trading

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Trading Plan Template for 2024 [Free PDF | Sheets Download]

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• Published: 11 May 2022
• Last Updated: 1 April 2024

Needless to say, having a plan before you start trading is essential to your success as a trader. Every experienced trader will tell you that when you enter the markets, you risk your money and, more importantly, your ego and confidence in yourself.

• A well-thought-out trading plan is crucial for forex trading success, safeguarding both finances and self-confidence.
• While many traders are naturally skilled, creating a clear trading plan can still be challenging.
• Using a trading plan template can streamline your strategy and increase chances of consistent profits.

This article will help you with everything you need to know about developing a trading plan . We’ll also include a trading plan PDF, a trading plan Excel template , and a Word document that you can download and use in your trading journey.

• What is a Trading Plan Template

Trading Plan Template FREE Downloads

• How to Build Your Own Trading Plan Template?

1. Set Your Goals – Financially and Emotionally

2. get familiar with trading jargon and analysis methods, 3. develop a trading strategy, 4. set a risk reward ratio, 5. always learn and grow, 6. make an organized trading track record.

• BOONUS: Trading Plan Infographic

What is a Trading Plan Template?

As the name implies, a trading plan is a set of rules and guidelines that a trader follows to execute a trade. Besides that, a trading plan might include suggestions for a healthy trading daily routine and tasks, hence a trading checklist , that will help you manage your account and control your emotions.

For example, with a trading plan, you can define your:

• trading goals
• strengths and weaknesses
• risk management strategy
• trading strategy
• entry rules
• daily routine
• and much more

“Plan your trade and then trade your plan.”

In this section, we have created trading plan templates that you can use for free in the format of your preference. 

• Trading Plan Template PDF
• Trading Plan Template Google Sheets
• Trading Plan Template Word

How to Build Your Trading Plan Template in 6 Easy Steps

So, now that you understand what a forex trading plan is, you need to create a specific plan that matches your style and personality. Personally, while working as a trader in a proprietary trading firm , I remember every trader had a different method, routine, tasks, and rules.

For example, some traders like adding sticky notes on their desktops while others prefer a clean table. Some traders enter hundreds of trades in one trading day while others enter one or two trades in a day. So, it’s up to you to define your own plan and trading strategies .

Nonetheless, based on my knowledge and experience, there are some must-have steps you need to consider to develop a successful trading plan .

You can download our trading plan template below and check the steps on how to develop your trading plan later in this article.

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First and foremost, you must define your goals. In other words, you will need to know what you plan to achieve from your trading experience.

To help yourself, ask these questions :

• Is it an additional income only? Your main income?
• Do you plan to get rich from trading?
• What is the trading capital you are willing to risk and what is your profit target?
• How many hours a day do you plan to spend on trading?

In that aspect, you’d be surprised to know that many people who become professional successful traders do not necessarily do it to make money.

Instead, some traders do it for fun, a hobby, or a competitive game. So consider these factors as well. If this is the case for you, then you need to know it before you start trading. Maybe it can give you an advantage over other participants in the forex market .

Before you make your first trade in the forex market, you first must understand the trading jargon and the different analysis methods.

If needed, take a quick trading course to learn how the forex or the stock market works, read articles, books, financial sites, etc. Additionally, you better explore the two methods to analyze financial assets – technical analysis and fundamental analysis . 

Then, find the best way for you to analyze the markets and read Forex charts. It’s up to you to decide whether you want to use line, bar, or candlestick charts and, more importantly, what technical indicators you want to use.

Additionally, you can learn how to read popular chart patterns and use them to find trading opportunities. Once again, you have to try before you know it.

No one is born a great Trader, one gets great by learning

There are no two traders that are precisely the same. Therefore, you must find your trading strategy and trading style. This is a result of trial and error. It might take weeks or months until you get to the point where you have established a successful trading strategy, and there’s no way to escape this step.

When you make your first step in the trading world, you’ll get familiar with the different trading strategies – position trading, swing trading, day trading, and scalping trading. Moreover, you can try different strategies such as the naked trading strategy or the 5-3-1 forex trading strategy .

Keep in mind that there are many trading strategies to choose from, but you’ll have to find your unique trading style and strategy within time. For that matter, you need to use a trading plan at the beginning of your journey to find the right strategy that matches your personality.

Trading risk management is a predefined strategy to minimize losses and maximize profits. There are lots of tools and risk management rules a trader can use to protect themselves from losses and effectively manage their trading account.

Having said that, there’s one tool used by many traders, which is the most basic and the most effective of all – That is the risk-reward ratio .

In simple terms, a risk-reward ratio is a method to calculate the potential profit of a trade/day/week/month to a potential loss. In other words, it is a method to define your trade risk, that is how much risk you are willing in a trader, or in a day (the method is particularly for day trading).

For example, if you decide to use a risk-reward of 2:1, you are essentially willing to risk $1 for each trade to earn $2.

Trading is not like most professions. The markets always change, the technology evolves, and even the dynamic of the markets is constantly changing. Trust me, financial markets are not the same as they used to be fifteen years ago, and most likely, they will change again in the future.

I mean, the cryptocurrency market is one good example of the unpredictable nature of the trading world and financial markets.

This way or the other, you must read trading books and articles, watch trading movies , and listen to trading podcasts – everything you can do to increase your knowledge. Yes, knowledge is power, but in trading, knowledge is essential.

“An investment in knowledge always pays the best interest.” Ben Franklin

In the final step, make sure you analyze your trading past performance and keep track of your winning and losing trades. Yes, it’s an annoying task, especially when you have a losing day.

Writing down your losing trades is a punch to your ego, but it will help you improve your performance and trading decisions in the future. By doing so, you can learn your worst-performing days of the week, hours, financial instruments, etc. 

Luckily, in most retail investor accounts, you can enter your trading platform and extract your daily/weekly/monthly performance. So, in the words of Forrest Gump: “One less thing to worry about”.

BONUS: Trading Plan Action Plan Infographic

Here is an infographic with 6 action steps for your trading plan.

You can also check our blog post about using a trading journal template [free Google Sheets and Excel spreadsheets included]

Over to You

In a nutshell, every trader must have a well-defined solid trading plan . Developing an organized trading system is the first step in becoming a professional and successful forex trader and will increase your chances of success over the short and long term.

For now, you can use our free Forex trading plan template to start with. Then, add notes, tasks, or any other inspirational quotes you think will help you to trade better.

Risk Disclosure: The information provided in this article is not intended to give financial advice, recommend investments, guarantee profits, or shield you from losses. Our content is only for informational purposes and to help you understand the risks and complexity of these markets by providing objective analysis. Before trading, carefully consider your experience, financial goals, and risk tolerance. Trading involves significant potential for financial loss and isn't suitable for everyone.

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Disclaimer: The information on the HowToTrade.com website and inside our Trading Academy platform is intended for educational purposes and is not to be construed as investment advice. Trading the financial markets carries a high level of risk and may not be suitable for all investors. Before trading, you should carefully consider your investment objectives, experience, and risk appetite. Only trade with money you are prepared to lose. Like any investment, there is a possibility that you could sustain losses of some or all of your investment whilst trading. You should seek independent advice before trading if you have any doubts. Past performance in the markets is not a reliable indicator of future performance.

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• Forex Trading Education
• Trading Plan Articles

Forex Trading Business Plan and Risk Analysis

One of the best things you can do as a forex trader to assure your long term survival in the business is develop a sound and objective forex trading business plan and the discipline to stick to it.

Going through this important process will help you overcome the emotional responses to trading that have been the downfall of so many novice traders.

Once you have developed a good trading plan that you think you can trade in a disciplined way, another good idea is to put all of your trading-related plans and ideas together into an overall trading business plan.

Benefits of a Forex Trading Business Plan

Even if you have been trading for a while, but have not yet written down a forex trading business plan, you can still derive considerable benefits from doing so even now.

Producing a business plan will help you review and solidify your personal trading business activities and goals.

Another major advantage of having a business plan is that if your trading business plan still looks good after its initial testing and trading period, you might even be able to use it to find new investors to put money into your trading business.

Having more funds to trade with can help you access better trading spreads, information, customer service and ultimately, better and more profitable trading opportunities.

Components of a forex Trading Business Plan

Your forex trading business plan does not need to be complex. At a minimum, it should contain your forex trading plan, how you intend to manage any money invested, and a risk assessment of your engagement in the business.

Additional components of a trading business plan might include:

(1)   What the competition is doing.

(2)   Necessary start up and running costs of your trading business.

(3)   The equipment necessary for your business to start operating.

(4)   How you plan on running your trading activities in detail.

(5)   How invested money will be held and managed within your trading business.

(6)   What you plan on achieving with your trading business in terms of profits and meeting other goals.

(7)   An overall risk/reward analysis showing that your trading business makes sense.

Most of the above forex trading business plan items are relatively self-explanatory; however the risk/reward analysis mentioned in item #(7) will be covered in greater detail in the following section.

Assessing the Risks of Your Trading Business

If you honestly believe that your trading business is worth pursuing, then it really cannot hurt to take a closer look at it from a risk/reward perspective. You can do this by assessing as objectively as possible what risks the business might face and what rewards you can reasonably expect to gain from pursuing it.

Furthermore, since some risks might occur with a greater probability than others, they can be weighted in a risk analysis according to their probability of happening. You can then multiply that weight by the potential size of risk involved to get a probability weighted risk exposure.

To get the overall risk/reward profile of your business, you would then sum up all of the risks and compare them to the rewards to see if your business makes sense.

Not only is such a business risk/reward analysis well worth doing, but it makes up an important part of your trading business plan that would ideally be created before you even make your first trade.

Many potential investors will want to see this risk/reward analysis information to help them assess whether your trading business stands a good chance of success for the risk you will be taking.

We also recommend you to read about the basic forex trading plan and why you should have it.

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Writing a Business Plan for Forex Trading Platforms: What You Need to Know

By henry sheykin, get full bundle.

Forex trading platforms have gained immense popularity in the US, offering individuals the opportunity to trade in the global foreign exchange market. If you're considering starting your own platform, this blog post is a must-read. We'll walk you through the essential steps to write a comprehensive business plan for your Forex trading platform, ensuring your success in this ever-growing industry.

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The Forex trading industry is booming, with a staggering growth rate of over 20% annually . The market is valued at trillions of dollars, making it one of the largest financial markets globally. With such promising statistics, now is the perfect time to capitalize on this thriving industry by launching your own Forex trading platform.

Before diving into the intricacies of writing a business plan, conducting thorough market research is crucial. You need to understand the current trends, customer preferences, and potential opportunities that exist in the market. By gathering valuable insights, you'll be equipped to develop a platform tailored to your target market's needs and preferences.

Identifying your target market is the next step in crafting your business plan. Determine the specific demographic or niche you want to cater to, whether it's experienced traders, beginners, or a specific geographic location. By clearly defining your target market, you can tailor your platform's features and offerings to meet their requirements and stand out from the competition.

Speaking of competition, it's essential to analyze your competitors . Identify existing Forex trading platforms in the market and assess their strengths, weaknesses, and unique selling points. This analysis will enable you to differentiate your platform, highlight your unique features, and develop effective marketing strategies.

To gain a competitive edge, it's crucial to define your unique selling points . Determine what sets your platform apart from others, whether it's advanced analytics, exceptional user experience, or access to industry experts. Clearly articulating your unique selling points in your business plan will ensure you stand out and attract traders to your platform.

Creating a successful Forex trading platform requires investment . Evaluate the costs associated with developing and launching your platform, such as technology infrastructure, software development, and marketing expenses. Determining the required investment early on will help you secure funding and ensure a smooth launch.

Adhering to regulatory and legal requirements is paramount in the Forex trading industry. It's imperative to evaluate these requirements and understand the legal framework that governs Forex trading platforms in the US. This will ensure compliance and avoid any legal pitfalls that may hinder your platform's operations.

A comprehensive marketing and sales strategy is crucial to attract and retain traders to your platform. Outline your strategies for acquiring new customers, such as digital marketing campaigns, referral programs, or partnerships with industry influencers. Additionally, detail your plans for retaining customers, leveraging customer satisfaction surveys, loyalty programs, or personalized services.

No business plan is complete without a financial projection . Develop a detailed projection that outlines your revenue streams, expected costs, and profitability over the next few years. This financial roadmap will serve as a guidepost and assist you in making informed financial decisions as your platform grows.

Lastly, surrounding yourself with the right team or forming partnerships is essential. Identify individuals with expertise in Forex trading, software development, and marketing, who can contribute to the success of your platform. Collaborations with industry experts or partnering with established brokerage firms can also enhance your platform's credibility and attract more traders.

Aspiring entrepreneurs in the Forex trading industry must follow these nine essential steps when crafting a business plan for their platform. Understanding the market, identifying your target audience, and creating a unique value proposition are all crucial components to ensure your platform's success in the ever-evolving Forex trading landscape.

Conduct Market Research

Market research is a critical step in developing a business plan for forex trading platforms. By conducting thorough market research, you can gather important information about the industry, target audience, and potential competition. This knowledge will enable you to make informed decisions and create a strong foundation for your platform's success.

When conducting market research for forex trading platforms, there are several key areas to focus on:

• Industry Analysis: Gain a deep understanding of the forex trading industry, its trends, and its future growth potential. Research factors that affect the industry, such as regulations, technology advancements, and market volatility.
• Target Audience: Identify and define your target market. Consider factors like demographics, trading experience, investment goals, and potential demand for your platform's services.
• Competition Analysis: Analyze the existing forex trading platforms in the market. Identify their strengths, weaknesses, and unique selling points. Determine how you can differentiate your platform to attract users.
• Customer Needs: Understand the needs and pain points of your target audience. What are the challenges they face while trading? How can your platform address those challenges and provide value?

Tips for conducting effective market research:

• Utilize both primary and secondary research methods. Primary research involves collecting data directly from potential customers through surveys or interviews. Secondary research involves analyzing existing data from industry reports, articles, and market research studies.
• Use online platforms and forums to gather insights from active traders. Engage with the forex trading community to understand their preferences and pain points.
• Keep a close eye on industry news, regulatory changes, and technological advancements that can impact the forex trading industry.
• Consider hiring a market research firm or consulting experts in the forex trading industry to gain specialized knowledge and insights.

By thoroughly conducting market research, you can create a solid foundation for your business plan and gain a competitive edge in the forex trading platform market. The insights gained will help you make informed decisions and tailor your platform's offerings to meet the needs of your target audience.

Identify Target Market

The success of a Forex trading platform greatly depends on identifying and understanding its target market. By accurately defining and targeting your audience, you can effectively tailor your marketing strategies, user experience, and platform features to meet their specific needs and preferences.

When identifying your target market, consider the following:

• Demographics: Understand the characteristics of your potential users, such as age, gender, location, occupation, and income level. This information will help you craft targeted marketing messages and create a user-friendly platform.
• Experience Level: Determine whether your platform will cater to beginner traders, experienced professionals, or both. This will influence the level of educational resources and support you provide.
• Trading Style: Identify the trading styles your target market prefers, such as day trading, swing trading, or long-term investing. This will help you design features and tools that align with their trading strategies.
• Needs and Pain Points: Understand the specific challenges and goals your target market faces in the Forex trading world. This knowledge will enable you to offer solutions and services that address their pain points and add value to their trading experience.

Target Market Tips:

• Conduct Surveys and Interviews: Engage with potential users to gather insights and feedback on their trading preferences and needs.
• Research Competitors: Analyze the target markets of your competitors to identify any gaps or opportunities.
• Stay Updated: Continuously monitor industry trends and changes in the Forex market to ensure your platform remains relevant to your target market.

Analyze Competition

When starting a Forex trading platform, it is essential to conduct a thorough analysis of the competition in the market. Understanding your competitors' strengths and weaknesses can provide valuable insights on how to differentiate yourself and gain a competitive edge. Here are the key steps to analyze your competition:

• Identify your direct competitors: Research and create a list of other Forex trading platforms that offer similar services in your target market. Consider factors such as their user base, reputation, and market share.
• Evaluate their trading features: Take a closer look at the trading features and functionalities offered by your competitors. Look for any unique selling points or innovative features that set them apart from others.
• Analyze pricing and commission structures: Study the commission rates and pricing models used by your competitors. Understand how they structure their fees and whether they offer any additional premium services or packages.
• Assess their marketing strategies: Examine how your competitors market their trading platforms. Look at their advertising campaigns, social media presence, and content marketing strategies. Pay attention to any partnerships or collaborations they have formed to attract more traders.
• Consider user reviews and feedback: Read user reviews and testimonials to gather insights about your competitors' strengths and weaknesses. Learn from their customer feedback to identify areas where you can improve your own platform.
• Do not underestimate the importance of market research. Stay updated with the latest trends and innovations in the Forex trading industry.
• Identify any gaps in the market that your competitors have not addressed. This can serve as an opportunity for you to offer unique value to your target audience.
• Keep an eye on emerging competitors and new entrants into the industry. Adapt and evolve your strategies to stay ahead of the competition.

Define Unique Selling Points

When developing a business plan for a Forex trading platform, it is crucial to define your unique selling points (USPs) that set you apart from the competition. Your USPs are the factors that make your platform attractive to potential traders and give them a reason to choose your platform over others in the market.

• Platform Features: Highlight the features that make your trading platform stand out. This could include advanced charting tools, real-time market data, customizable user interfaces, or innovative order types. Clearly communicate how these features can enhance the trading experience for your users.
• Trading Education: Consider offering comprehensive educational resources to help traders improve their skills and make informed decisions. This could include tutorials, webinars, or access to educational material from experienced traders. Emphasize how your platform can empower traders to become more successful.
• Customer Support: Provide exceptional customer support to differentiate your platform. Offer multiple channels for traders to reach out for assistance, such as live chat, email, or phone support. Highlight your prompt response times and knowledgeable support team.
• Security Measures: In the Forex trading industry, security is a significant concern for traders. Assure potential users that your platform has robust security measures in place to protect their personal and financial information.
• Research your competitors to identify their strengths and weaknesses. Look for gaps in the market that you can fill with your unique offerings.
• Get feedback from potential traders to understand their needs and preferences. Use this information to refine your USPs and tailor your platform accordingly.
• Consider conducting surveys, focus groups, or beta testing to gather insights and validate your unique selling points.

Determine The Required Investment

Before launching a forex trading platform, it is essential to determine the required investment to ensure that you have enough capital to start and sustain the business. Here are some important factors to consider when determining the required investment:

• Technology Infrastructure: Developing a robust and reliable trading platform requires a significant investment in technology infrastructure, including servers, software development, and cybersecurity measures. It is crucial to allocate a budget for these technical requirements.
• Compliance and Legal Costs: Forex trading platforms are subject to various regulatory and legal requirements, such as obtaining licenses and adhering to anti-money laundering rules. It is important to consult with legal experts to understand the compliance costs involved and budget accordingly.
• Marketing and Advertising: To attract traders to your platform, you will need to invest in marketing and advertising campaigns. This may include online advertising, social media marketing, content creation, and public relations activities.
• Operational Expenses: Consider the costs of running the platform, such as office space, employee salaries, customer support, and administrative expenses. It is important to estimate these ongoing operational costs to ensure financial viability.
• Risk Management: Forex trading involves risks, and it is essential to have adequate risk management systems and tools in place. This may involve investing in risk management software, hiring risk management experts, or partnering with third-party providers.
• Research and compare the costs of technology providers and software development firms to choose a cost-effective option.
• Consider outsourcing certain functions, such as compliance or customer support, as it can be more cost-effective.
• Factor in potential future growth and expansion when determining the required investment.
• Consult with industry experts or seek advice from experienced traders to understand additional costs or potential pitfalls.

By carefully considering these factors and conducting thorough cost analysis, you can determine the required investment for your forex trading platform. This will help you create a realistic financial projection and ensure that you have the necessary resources to establish and operate a successful platform.

Evaluate Regulatory And Legal Requirements

Evaluating regulatory and legal requirements is crucial when starting a forex trading platform. Compliance with these requirements not only ensures the platform's legitimacy and credibility but also protects both the platform and its users from potential legal issues. Here are some important aspects to consider:

• Licensing: Check the regulatory bodies and licensing requirements in your target market. Different jurisdictions may have varying rules and regulations regarding forex trading platforms. Determine the specific licenses or registrations required to operate legally.
• Anti-Money Laundering (AML) and Know Your Customer (KYC) Procedures: Develop robust AML and KYC procedures to comply with regulatory obligations. These procedures aim to prevent illicit activities, such as money laundering and terrorist financing, by establishing due diligence processes for customer identification and verification.
• Data Protection and Privacy: Ensure compliance with data protection and privacy laws to safeguard users' personal and financial information. Implement strict security measures, such as encryption and secure data storage, to protect against unauthorized access or data breaches.
• Terms of Service and User Agreement: Draft comprehensive terms of service and user agreement documents. These documents should outline the platform's rules, rights, and responsibilities, as well as the users' obligations. Consult with legal professionals to ensure the documents are legally enforceable and cover all necessary areas.
• Risk Disclosure: Provide clear and transparent risk disclosure statements to users. These disclosures should highlight the risks associated with forex trading, including the possibility of financial losses. Ensure that users acknowledge and understand these risks before using the platform.
• Consult with legal advisors specializing in finance and regulatory compliance for guidance throughout the evaluation process.
• Stay updated with any changes or updates in regulatory and legal requirements. Compliance is an ongoing process, and the platform must adapt accordingly.
• Establish a system for regularly reviewing and auditing compliance processes to ensure ongoing adherence to regulatory obligations.

Create A Marketing And Sales Strategy

Once you have conducted market research, identified your target market, analyzed the competition, defined your unique selling points, and determined the required investment, it's time to create a comprehensive marketing and sales strategy for your Forex trading platform.

Your marketing and sales strategy should aim to attract traders to your platform and convince them to choose your services over those of your competitors.

• Identify your target audience: Determine the specific group of traders you want to target. This could be based on factors such as demographics, trading experience, or specific trading preferences.
• Develop a strong brand: Create a unique and compelling brand identity that differentiates your platform from others in the market. Clearly communicate your value proposition and the benefits traders can expect from using your platform.
• Create a digital presence: Establish a professional and user-friendly website that showcases your platform's features and benefits. Optimize your website for search engines to drive organic traffic and consider utilizing paid advertising channels to increase your online visibility.
• Utilize social media: Leverage popular social media platforms like Facebook, Twitter, and LinkedIn to engage with your target audience, share relevant content, and build a community around your brand.
• Offer informative content: Develop and share high-quality educational content that helps traders improve their skills and knowledge. This could include blog posts, videos, webinars, or downloadable resources.
• Establish strategic partnerships: Collaborate with industry influencers, trading experts, or financial institutions to enhance your credibility and expand your reach. Consider offering affiliate programs to incentivize partners to promote your platform.
• Provide exceptional customer support: Offer prompt and personalized customer support to build trust and loyalty among your users. Resolve issues quickly, listen to feedback, and continuously improve your services based on customer needs.
• Stay updated with industry trends and regulations to ensure your marketing and sales strategies align with current standards.
• Monitor and analyze the performance of your marketing efforts using analytics tools to identify areas of improvement and optimize your strategies accordingly.
• Consider offering incentives or discounts to attract new traders and encourage them to become loyal users of your platform.

Develop A Financial Projection

Developing a financial projection is a crucial step in creating a business plan for Forex trading platforms. It provides a roadmap for the financial success of your platform and helps you make informed decisions about your business's future. Here are some key points to consider when creating a financial projection:

• Determine your revenue streams: Start by identifying all potential revenue streams for your Forex trading platform. This may include commission fees, premium service charges, or any other sources of income. Having a clear understanding of your revenue streams will allow you to accurately forecast your earnings.
• Estimate your operating costs: Calculate the costs associated with running your platform, including technology infrastructure, personnel, marketing, and regulatory compliance expenses. It is important to be thorough and realistic when estimating costs to ensure an accurate financial projection.
• Consider market trends and growth potential: Research the Forex trading market and analyze market trends to understand the potential growth of your platform. This will help you estimate future revenue and adjust your financial projection accordingly.
• Forecast user acquisition and retention: Predict the number of users you expect to acquire and retain over time. This will impact your revenue projections as well as your marketing and sales strategies. Consider factors such as user acquisition costs, customer churn rates, and strategies for user retention.
• Include a cash flow statement: A cash flow statement is a crucial component of your financial projection, as it shows the inflow and outflow of cash over a specific period. It helps you understand how much cash your platform will generate and how it will be managed.
• Account for regulatory and legal requirements: Ensure that your financial projection takes into account any potential costs or constraints related to regulatory compliance. This may include licensing fees, legal consultation costs, or fines for non-compliance.

Tips for developing an accurate financial projection:

• Consult with financial experts: Consider seeking advice from professionals who specialize in financial forecasting for Forex trading platforms.
• Keep updated with market data: Stay informed about market trends, changes in regulations, and industry benchmarks to make realistic assumptions in your financial projection.
• Be conservative in your estimates: It's better to underestimate your revenue and overestimate your costs to ensure a realistic projection.
• Regularly review and update your financial projection: As your platform evolves and new information becomes available, revisit and revise your financial projection to keep it accurate and aligned with your goals.

Establish A Team Or Partnership

Building a strong team or forming strategic partnerships is crucial for the success of your forex trading platform. Collaborating with the right individuals or organizations can bring expertise, resources, and a wider network to support and grow your business.

When establishing a team for your forex trading platform, consider the following:

• Identify key roles: Determine the specific roles and responsibilities required for your platform, such as developers, traders, customer support, and marketing professionals. Ensure that each team member brings unique skills and experience that align with your business goals.
• Recruit top talent: Seek out individuals with a deep understanding of the forex market and trading platforms. Look for candidates with a proven track record, relevant certifications, and a strong passion for the industry. Consider conducting thorough interviews and assessments to ensure the best fit for your team.
• Create a positive work culture: Foster a collaborative and inclusive work environment to encourage creativity, efficiency, and teamwork. Regular team meetings, feedback sessions, and professional development opportunities can help enhance employee satisfaction and productivity.
• Form strategic partnerships: Identify potential partners who can complement your platform's offerings and expand its reach. This could include partnering with brokerage firms, financial institutions, or technology providers. A strategic partnership can help you leverage each other's strengths and offer a more comprehensive solution to your target market.
• Consider leveraging online platforms and professional networks to find potential team members or partners.
• Establish clear communication channels and set expectations from the beginning to ensure smooth collaboration.
• Regularly evaluate the performance and contribution of team members to ensure that they align with the evolving needs of your platform.
• Continuously explore new partnership opportunities to stay competitive and broaden your platform's capabilities.

By taking the time to establish a strong team or partnership, you can enhance the overall effectiveness and competitiveness of your forex trading platform. Remember that collaboration and ongoing evaluation are essential to adapt to market trends, deliver exceptional user experiences, and drive sustainable growth.

In conclusion, writing a business plan for a forex trading platform requires careful consideration and strategic planning. By conducting market research, identifying the target market, analyzing competition, and defining unique selling points, you can position your platform for success. Determining the required investment, evaluating regulatory requirements, and creating a marketing and sales strategy are important steps to ensure compliance and attract users. Developing a financial projection and establishing a team or partnership will contribute to the overall growth and sustainability of your platform. With proper planning and execution, your forex trading platform can thrive in the competitive market.

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The Ultimate Guide to Creating a Forex Trading Plan (Step by Step)

We all know how important it is to have a solid forex trading plan.

But how do you get started?

To help ease that uncertainty, we’ve created this guide that will show you, step by step, how to create a forex trading plan that leaves no stone unturned.

Even if your plan is already up and running, it never hurts to revise it – to make sure it’s as good as it could be.

So, if you’re having trouble creating your forex trading plan, or if you want to tweak your existing plan, read on.

How to Create a Forex Trading Plan

There are two options:

The first option is that you simply take a piece of paper and start to note everything you find important.

Needless to say, this is not the best approach.

To make sure you don’t leave out any essential parts, it’s better to follow a systematic process.

That’s why we created this guide.

For our tutorial, we’ll be building on the strategic management process.

The strategic management process is a six-step process that encompasses strategy planning, implementation, and evaluation. This is the same process that companies like Apple use to define organizational objectives.

Here’s what it looks like:

Source: Stephen P. Robbins, Mary Coulter – Management, 11th Edition (2011, Prentice Hall)

It’s a great concept, but because it is developed for organizations, we made some modifications to make it relevant for traders.

Following the seven steps we’re about to show you, you can create your forex trading plan.

Are you curious?

Great! Then, let’s get started.

(To get the most benefit from this guide, make sure to read all the steps carefully and in order.)

Step 1: Set Your Goal

In the first step, you will have to form a clear understanding of what you’re trying to accomplish.

Setting goals is a skill in itself, but don’t worry—there’s a shortcut.

Some of you have probably already heard of the SMART goals formula. It’s a simple framework for goal-setting, widely used in the field of project management, and performance development.

If you’re new to this, here’s a short explanation from MindTools :

In a nutshell, you have to make sure that your goal is:

Let’s look at an example:

• Specific : I want to supplement my income with $500 per month trading forex.
• Measurable : I will build a trading strategy that produces an average return of $500 per month when backtested on five years of historical market data.
• Attainable : I have a trading capital of $20,000. This means I need to produce an average monthly return of 2.5%. Many traders have proven that this is possible without taking excessive risks. Therefore, I’m convinced that my goal is realistic.
• Relevant : I have been studying forex trading for over a year. I have always been interested in the financial markets and have read several books on the topic. Consequently, I feel that I am capable of reaching this goal.
• Time-bound : I assume that during the first three months of trading, I’m going to lose money. Then, as I became better at live trading, I expect to recoup my losses and get into break-even half a year after I started. From then on, I can gradually proceed toward my goal. I expect that after one year of trading, I can consistently make an average of $500 per month.

See how different this is from just saying that you want to make money?

It forces you to map out the process and support your ideas with facts. This is why irrational goals fall apart when they’re plugged into the SMART goal formula.

You can save yourself a lot of time, money, and energy by making sure that what you’re pursuing is realistic.

If you’re done creating your SMART trading goal, you can proceed to step 2.

Step 2: Perform a SWOT Analysis to Determine Your Ideal Trading Style

One of the key features of a successful forex strategy (we’ll get to that in a minute) is that it suits your personality and circumstances.

You don’t want to trade one-minute charts if you get nervous watching your account fluctuating. Similarly, you don’t want to have a day trading strategy if your job requires you to run around all day.

Simply put: There are internal and external factors that you need to consider when developing a trading strategy.

That’s where we can borrow yet another tool from the realm of management: the SWOT analysis.

In case you’re wondering, SWOT stands for Strengths, Weaknesses, Opportunities, and Threats. Companies use this type of analysis to assess the organization’s current position before deciding on a new strategy.

Source: The Coaching Tools Company

As you can see, it’s a combination of internal and external analyses. Let’s investigate how forex traders can use it.

Internal Analysis

Did you know that, above all, trading is a psychological game?

The major reason why people fail usually boils down to trading psychology. Fear, greed, and regret can prompt people to do all kinds of crazy stuff. We don’t have to give you examples.

Now, you can’t eliminate your emotions from trading just like that, but you can take some time to identify your psychological strengths and weaknesses. That’s what we call an internal analysis.

An internal analysis will allow you to create an environment – both mental and physical – that capitalizes on your strengths and minimizes the situations that expose your weaknesses. It’s also a great opportunity to highlight where you can develop yourself as a person.

So, the next stage would be to fill out the strengths and weaknesses part of the SWOT diagram.

You want to be honest with yourself, but there’s some room for flexibility. For example, if you’re short-term-oriented, it’s up to your personal experiences as to whether or not you consider this a weakness. Try to be as factual as you can get. After all, you’re doing this for yourself.

Here are some general personality traits that can add to your chances of success:

• Determination
• Trustworthiness

And some that might hold you back:

• Inflexibility
• Irresponsibility
• Disorganization

These are just to get you started. Of course, the more specific you are, the better.

If you’re done, let’s move on to:

External Analysis

Besides discovering your psychological traits, you need to consider factors that lie outside of you. Your resources and circumstances are both very important determinants of the trading strategy you’re going to develop.

Sure enough, these are vague terms, but you don’t have to think of anything complicated.

For example, you might be a millionaire with a degree in economics and hours of uninterrupted time for trading. In this case, your opportunities include money, relevant professional knowledge, and time.

On the other hand, you might live in a place where the internet connection is hit or miss. Also, for whatever reason, you can’t trade between 2PM and 5PM. Those are threats. Some of your trades might not go through, and you are missing out on the most active market period.

Similarly, come up with some external factors that pose opportunities and some that are rather threatening to your trading career.

Once the SWOT analysis is ready, you can choose the most relevant trading style.

Choose Your Trading Style

A trading style is a particular manner of trading, typically determined by the length, timing, and frequency of your trades.

There are four different trading styles:

• Day trading
• Position trading
• Swing trading

It would be a large detour to talk about them here, but we have an entire guide on trading styles that will help you out.

The point is that your trading style gives the basis for your trading strategy.

Think about it as choosing a shoe. It’s possible to go running in a hiking shoe, but you’re going to struggle. Similarly, it’s important to pick the trading style that makes the most sense for your situation.

Step 3: Set Money Management Rules

Before you start putting together a trading strategy, you need to lay down some solid money management rules.

What does that mean?

Money management can be broken down into three parts:

• Deciding how much you risk per trade.
• Deciding what your maximum aggregate risk can be.
• Deciding how much and how frequently you cash out.

Let’s start with the first one.

Addressing the risk Issue – How much to risk?

Do not risk thy whole wad – as the old adage goes.

When your trading career depends on available trading capital, protecting your account becomes an important factor. In other words, you must avoid risks that can put you out of business.

Now, risking the whole wad will certainly lead to failure, but so will risking much lower amounts, like 20% or 10%.

The disadvantage of betting too much on a single trade is two-fold:

First, the market is a very uncertain environment. You simply can’t achieve a big enough edge that would justify excessive risks.

Second, losing a larger amount is psychologically distressing and you’re more likely to fall into revenge trading (i.e., risking even more to recoup your losses and eventually blowing your account).

So, what’s optimal?

According to BabyPips, you should never risk over 2% per trade.

This is pretty solid advice and we tend to say the same. While the actual number will be slightly different for everybody, for most people risking between 1 and 2% is indeed optimal.

Setting the limit for aggregate risk

When we talk about aggregate risk, we refer to the risk your account is exposed to considering all open trades.

If you use the same risk percentage on each position, your aggregate risk will be the number of open trades. In other words, if you’re risking 1% per trade and have five open trades at the same time, your aggregate risk is 5%.

This should make sense.

If you used different risk levels, for example, 2% on position A but only 1% on position B, you would need to summarize the risks. In this example, we would add 1% and 2% to get an aggregate risk of 3%.

While it’s not rocket science, you do need to set some limits for yourself, especially because of psychology.

If you trade multiple currency pairs, it makes sense to go even further and set rules regarding aggregate risk per currency. For example, if you have a long position on EUR/USD, and a long on EUR/GBP, and a long on EUR/JPY, your overall euro exposure might be too high.

You’re basically purchasing the same euro, just with different currencies. Even one bit of bad news can send the euro into a freefall against major currencies, leaving your account badly damaged.

Deciding how much and how frequently you cash out

This is from the nicer issues.

Because you’re aspiring to be a successful forex trader, it’s a good idea to think about what you’re going to do with the money you make.

What’s fortunate is that there’s no right or wrong answer here.

After all, the profits are yours and you can do whatever you want with them. That said, you want to approach everything as strategically as possible.

Basically, there are two common scenarios:

You either cash out all your profits at the end of the month, or you cash out a fixed percentage and let the rest grow in your account.

We don’t recommend the first scenario because if you have a bad month, you’ll fall below your deposit, which you probably don’t want to do.

The second option is better because even if your goal is to live off your profits, you can take out something like 90% of your gains and still have the benefit of compounding.

Naturally, the more your goal is building wealth as opposed to making income, the more you must leave in your account. That way, you can benefit from compounding to a much larger extent.

(If you’re wondering how long it would take to reach 1,000,000 dollars, or any other amount, check out our forex compounding calculator.)

Step 4: Formulate Your Trading Strategy

A trading strategy is a collection of rules that determine how you enter and exit your trades.

Many people confuse trading strategies and trading plans. However, if you have read this far, you should see that a strategy is just one piece of the puzzle. That said, it’s a very important piece, so you need to have one.

Essentially, a strategy can be built in five steps:

• Choose a time frame.
• Pick your currencies.
• Choose an entry signal.
• Choose an exit signal.
• Choose a risk-to-reward ratio.

In our guide to building a forex trading strategy , we go into detail on each of these steps, so here we’ll cut it short.

The key is to understand that building a strategy is a process and takes time. It doesn’t end with you walking through the above steps. In fact, completing the steps is just the beginning that allows you to move on to backtesting.

Step 5: Backtest Your Trading Plan

Backtesting is the process of applying your trading approach to historical market data to see how it would have performed. If the result is not optimal, you make a change and backtest again. Rinse and repeat until everything is great.

The key is to make one change at a time so that you clearly see the effect.

Notice that we used the words trading approach.

When it comes to backtesting, almost everybody talks about it as if it were relevant only for trading strategies.

So, let’s get this clear:

While backtesting is indeed centered around the strategy, once you have a trading plan, you must also backtest the plan at the same time.

At a minimum, you must observe your money management rules. For example, if you decided to risk a maximum of 1% of your capital, stick to that while backtesting.

Since we’re talking about testing, it’s a good idea to experiment with different risk parameters to see how they affect your performance. But, again, make one change at a time.

If you bumped up your risk level, keep everything else intact for that testing round. That way, you’ll see whether there’s a benefit to taking a higher risk.

Step 6: Implement Your Trading Plan and Keep a Trading Journal

If you’ve gotten to this part, pat yourself on the back. You’re ready to execute your trading plan on the live market.

It’s as simple as it sounds, but there’s one more twist we want you to know about:

Whenever you open a trade, journalize it immediately into an Excel file.

A trading journal serves two distinct purposes.

First, it serves as instant feedback about your ability to follow the plan.

Second, it provides the data that you can use to analyze yourself.

You might be thinking: Okay, but what details go into the journal?

Just take a look at the following picture:

To begin, note the general parameters of each trade. In MetaTrader, you can access this information by looking at the open position window or clicking the account history tab for already closed trades.

Next, add two screenshots of the trade. Ideally, you will take a photo right after you open the position, and another photo right after you close it. Feel free to write notes on the photos if needed.

The following step is to explain the signal that made you open the trade. The signal is defined in the strategy; you just name it here. The same goes for the exit signal.

Finally, add some comments. How did you feel before opening the trade, while the trade was open, and after the trade was closed? Answer these questions and add any other information you find important.

Step 7: Evaluate Your Trading Journal Periodically

The thing is, no matter how hard you try, you’ll make mistakes.

By reviewing your trading journal every week or month (depending on how frequently you trade), you can spot recurring blunders and take the necessary steps to correct them.

In addition, it is a great opportunity to monitor your trading plan. If you generally do everything correctly, but your results start to significantly diverge from those of the backtesting data, it might be time to revise your plan.

Markets change all the time and you have to keep up.

This doesn’t mean you should throw away the plan and create a new one. However, you must think smart and make adjustments.

For example, if you’ve had a stable win/loss ratio for a year, and then it suddenly starts to deteriorate, you will need to look into your trading journal to determine the root of the problem.

It might reveal that most losses happen because a price swing takes you out of the market. In that case, you can keep wider stops.

Or it might reveal that one specific technique is producing the bad trades. Then, you can either eliminate it or try to make some optimizations.

The point is, when market circumstances change, you usually don’t have to create a new plan from scratch.

Even if you’re completely new to forex trading…

Even if you’ve never been profitable…

Even if you’re not a finance expert…

You can create a forex trading plan that allows you to reach your goals.

This guide lays out an exact process that you can follow step by step. It is based on a model that has already been proven to generate results for billion-dollar companies.

There will be moments when the process gets grueling. However, when you’re consistently profitable and live life on your own terms, you will be redeemed a thousand times over.

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Forex Trading Education

How to Create a Precise Forex Trading Plan: Step-By-Step Guide

Nailing down a trading plan can be a daunting task. But if you have a template to work with, it becomes much easier. Here's the template you need to get...

Last updated: March 31, 2024 By Hugh Kimura

A trading plan is vital to your success as a trader because it gives you a set of proven rules to follow, even when your emotions are trying to make you trade impulsively. But how do you actually create a trading plan for Forex trading?

Good question.

In this post, I will show you exactly how to create a trading plan, even if you have never done it before. I've added a few additional tips after the video, so be sure to read on.

You Don't Have a Trading Plan If…

Some traders think that they can just copy a trading  strategy from a forum and BOOM…they have a trading plan.

Far from it. 

You do not have a trading plan if you have ever said any of the following:

• “I trade on instinct.”
• “I look for strong trends and jump on them.”
• “I trade fundamentals.”
• “I look for trend reversals.”

Now don't get me wrong…any of these statements could have a solid trading strategy behind them. But if your entire trading strategy consists of these statements, then you are in big trouble.

So if you need a real trading plan, here's what to do next…

Write Down Your Plan

This is the biggest step to creating a trading plan…that actually helps you trade better. So many traders keep their trading system in their head, then wonder why they are indecisive and stray from their rules.

Write it down and it will always be there in black and white, for you to reference later. I prefer to start out by actually printing out the Strategy Development Worksheet because it is easier to take notes and write out 2 or 3 systems to test, at a time.

From there, then I write down the final system in Evernote .

Do whatever works best for you. If you want a ready-made worksheet, then you can download the one I use.

Download the Worksheet

Click this button to get the PDF:

Strategy Name

First, give your strategy a name. This might sound a little weird, but it will help you track the development of your trading method later.

Name it whatever you want, or simply use the original name that came with the course you learned it from. The only thing that matters is that the name makes sense to you.

So feel free to get creative.  🙂

Strategy Version

Next, you want to version every single change that you make to the original trading plan. I use version 1, 2, 3, etc., but if you want to get crazy and do 1.1, 1.2, 1.3, etc., then go for it.

This will help you isolate what is working and what isn't. Remember to change one thing at a time and change the version number with every change. 

Let's say that you that you have the following parameters in your trading plan:

• 1% risk per trade
• Exponential Moving Average (10)
• Exponential Moving Average (20)
• One position, one profit target at 1R
• Stop loss on the other side of the entry candle

Then you change it to:

• One position, one profit target at 2R

That is when you would change your version number. After that, you might consider changing your parameters to:

• 2% risk per trade

Yeah, change the version number again.

You get the idea.

Currency Pair(s)

Then you need to write down which currency pairs you have tested. Not all trading strategies will work on all currency pairs, so it's important to test one at a time.

Start with one pair. Write it down, then record the results.

Test the next pair, do the same. This process will help you understand which pairs are safe to trade and which ones you need to avoid.

Indicators Used

Now it's time to record any indicators that you will be using with your trading system. Also be sure to record the settings that you are using.

It can be easy change settings mid-testing, then not know which setting worked best. So write it down, follow the plan, and you will know exactly what is working and what isn't.

If you are doing pure Naked Trading , you can leave this section blank.

Primary Timeframe

Which timeframe have you actually tested this trading method on? Don't write down 5 minute, 1 hour and daily, if you have never tested your system on any of these timeframes.

The course you bought may have told you that a strategy will work on any timeframe, but test it yourself.

Never trust your money to hearsay. Test one time period at a time and get statistics for each one.

Entry Signal

How will you enter the trade? This can be more complex than it seems, but the more exact you can define your entry, the more consistent your results will be.

Remember to note the following rules for your entry :

• The exact conditions that will determine your entry
• Any reasons that you entry might become invalid
• External conditions to consider, such as related markets or news events
• Time of day that you should/shouldn't be trading
• If it's better to only go long or short with a certain currency pair

Once you have your entry mapped out, it's time to write down some other important parts of your trading plan.

Where will you place your stop loss ? Will it be above/below the current candle?

Is it a certain number of pips?

Detail your stop loss in this section and draw diagrams, if necessary.

% Risk Per Trade

This is really important. The same trading system can behave very differently when you risk different amounts per trade.

I would recommend starting off with 1% risk per trade, then test less or more risk, to see what suits you best. Remember to change your version number every time you use a different amount of risk.

Keeping your risk the same for every trade makes it much easier to handle the drawdowns and diagnose issues, when your trading isn't going as expected.

When to Take Partial Profit

If your trading plan includes taking partial profits when price starts to move your way, then note that in this section. Again, be as specific as possible.

Some common places that traders take partial profits are:

• When the trade reaches 1R or some multiple of the amount risked
• At a short-term  support/resistance level
• At an indicator like a moving average

What you must avoid is setting a partial profit target based on “feel,” instead of definable rules.

When to Move Stop Loss

Do you want to move your stop loss to breakeven , to lock in a trade that is moving in your favor? This works for some traders and not for others.

But this is certainly something to consider.

When to Add to Position

Are you going to pyramid your trade by adding positions after the initial entry? This might not be your style, but if it is, be sure to note your add-on strategy here.

Be sure to clearly define exactly when you will add to your position and when you will not. Drawing a diagram usually helps.

Should You Re-Enter if Stopped Out

This can be an important rule to keep your sanity and your trading account. When you are convinced that you are right about a trade and it doesn't work out, it can be tempting to re-enter the trade again and again.

…and again.

When you limit your re-entries beforehand, you keep yourself out of trouble. I personally use the Two-Strikes Rule .

Figure out what works best for you.

Exit Signal

Now, how do you cash in your entire trade? There are many ways to take profit, but here are a few that traders use:

• Risk multiples: 1R, 2R, etc.
• Next support and resistance level
• A Fibonacci extension level
• An indicator, like the Parabolic SAR

Like with partial profits, clearly define your exit signal and don't leave it up to your “gut.”

Other Considerations

If there is anything that I missed above, put it into this section. There is always some special circumstance that traders need to have in their plan, so I made a space for it here.

This could include markets to check before you start trading and any pre-trading routines that you should go through. Yes, writing that stuff down on every test could get repetitive. But it will burn it into your brain 🙂

Test Your Trading Plan

Alright, now that you have a trading plan written down, that's just the first step…you aren't done yet! Now I'll briefly get into what you will need to do to after you have a plan.

Since these steps aren't the primary focus of this post, be sure to reference the links provided below.

Before you actually trade your kick-ass trading plan with live money, it's time to test it out in backtesting to find out what you can expect. Never trade a plan with real money, unless you know it has a good chance of working out, by testing. 

After you have backtested it, you also have to forward test it. This will show you any differences between your backtesting and live market conditions.

If your system performs as expected, only then should you move it into live trading.

Rework Your Plan (If Necessary)

A trading plan that looks promising in testing may not actually work well in real trading. This is usually because trading real money has a drastically different psychological profile, compared to trading play money.

So at this point, you may want to rework your plan to make it friendlier in live trading.

Track Your Results

Another important step after creating a trading plan is to track your results. You should start with a trading journal, like this .

But you should also have a way to get live stats on your trading. One of the easiest ways to do this is to use MyFxBook .

This will allow you to compare your testing results with your live results. 

Possible Improvements to Test

Even when you have a system that works in live trading, you aren't done with your trading strategy worksheet yet! Keep it around because you want to record any ideas that you may have for improving your trading method.

You might want to test a bigger profit target. Or you may want to test an entry on a lower timeframe.

Most traders will have some ideas on how to improve their trading system. But instead of trading the idea right away, simply write them down and go through this process again.

So that is how you create a trading plan. There may be other things that you want to include later, but the plan outlined above will get you started.

Test your plan and follow it . This can be hard to do, but figure out how to get yourself to stay with the program. You may want to tape your plan to your computer screen , keep a  notecard on your desk or put it on the home screen of your phone.

Happy trading!

Related Articles

• How to Create Your Own Forex Trading System
• Trending Outside Bar: Forex Trading Strategy Plan (Version 1)
• CCI Divergence Breakout Strategy Testing Plan – Version 1
• My Best Forex Hedging Strategy for FX Trading
• How to Become a Successful Trader (Step-By-Step)
• 5 Steps to a Rule-Based Trading System That Works

About Hugh Kimura

Hi, I'm Hugh and I'm an independent trader. Before starting Trading Heroes in 2007, I used to work at the trading desk of a hedge fund, for one of the largest banks in the world and at an IBM Premier Business Partner.

Learn more about me here and read more of my articles here.

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Table of contents, execute your forex business plan.

• 11 May, 2024

Establishing a Forex Business

Before diving into the world of forex trading, it’s important to establish a solid foundation for your forex business. This involves understanding and implementing effective risk management strategies to mitigate potential risks and ensure the long-term success of your business.

Understanding Risk Management

Effective risk management is a crucial aspect of running a forex business. It involves identifying, assessing, managing, and monitoring risks to protect your business from potential losses. By proactively addressing risks, you can minimize the impact of unforeseen events and maintain the stability of your operations.

Risk identification can occur through various means, including passive discovery of vulnerabilities or the implementation of tools and control processes that raise red flags when potential risks are identified ( AuditBoard ). It’s essential to have a comprehensive understanding of the risks associated with forex trading, including market risk, credit risk, operational risk, and reputational risk. Each of these risks carries its own set of challenges and requires specific risk management strategies.

Implementing Risk Management Strategies

Once risks have been identified, it’s crucial to implement risk management strategies to mitigate their impact. This involves putting in place measures and controls to minimize the likelihood of risk events occurring and to reduce their potential consequences.

Some common risk management strategies in the forex business include:

• Diversification : Spreading investments across different currency pairs and markets to reduce exposure to a single risk.
• Hedging : Using financial instruments such as options or futures to offset potential losses in currency positions.
• Stop-loss orders : Setting predetermined price levels at which trades will be automatically closed to limit potential losses.
• Position sizing : Determining the appropriate size of each trade based on risk appetite and available capital.
• Continuous monitoring : Regularly assessing and reevaluating risks to adapt strategies as market conditions evolve.

Risk management is an ongoing process that requires continuous monitoring and adjustment to ensure the effectiveness of the implemented strategies ( AuditBoard ). By actively managing risks, you can protect your forex business from potential pitfalls and improve the likelihood of achieving long-term success.

In addition to risk management, it’s essential to comply with regulatory requirements and obtain the necessary licenses and permits for your forex business. For more information on how to start a forex business and the legal aspects involved, refer to our article on how to start a forex business .

Establishing a strong risk management framework and implementing effective strategies will provide a solid foundation for your forex business, allowing you to navigate the complexities of the forex market with confidence.

Trading in the Forex Business

Once you have established your forex business and implemented risk management strategies, it’s time to focus on the trading aspect. Successful forex trading requires understanding statistical independence, developing a profitable edge, and utilizing both fundamental and technical analysis.

Statistical Independence in Trading

In the forex business, each trade is statistically independent of every other trade, similar to how each hand in a game of blackjack is independent of the other. This means that the outcome of one trade does not influence the outcome of another trade. Over time, if traders follow basic strategies and have an edge over the markets, they can generate profits.

Traders should recognize the independence of each trade and believe in letting good odds play out. By understanding and accepting statistical independence, traders can remove emotions from their trades and make decisions based on probabilities and their edge in the markets.

Developing a Profitable Edge

Profitable forex traders rely on the knowledge that their trading system works due to the efforts they have put into fine-tuning their trading styles and methods. Having an edge over the markets is crucial for consistent profitability in forex trading ( BabyPips ).

To develop a profitable edge, traders need to continuously refine their trading strategies and techniques. This involves analyzing past trades, identifying common traits in losses and wins, and adapting their trading plan accordingly ( TradeThatSwing ). By constantly improving and finding opportunities in the markets, traders can increase their chances of success.

Utilizing Fundamental Analysis

Fundamental analysis plays a crucial role in forex trading. It involves monitoring economic data and events that can impact currency values. Traders analyze factors such as interest rates, unemployment rates, GDP, and other economic indicators to assess the strength and potential future direction of a currency.

For instance, a trader analyzing the EUR/USD pair would find information on Eurozone interest rates more useful than those in the U.S. Fundamental analysis helps traders understand the underlying economic factors that can influence currency movements and make informed trading decisions.

Leveraging Technical Analysis

Technical analysis is another essential tool in forex trading. It involves studying price charts, patterns, and indicators to forecast future price movements. Traders using technical analysis aim to identify trends, support and resistance levels, and potential entry and exit points.

Technical analysis can be manual or automated. Manual systems rely on a trader’s interpretation of technical indicators to make buy or sell decisions. Automated systems, on the other hand, use past price movements to predict the future direction of a currency.

Acquiring forex trading systems and strategies can involve either manual applications or automated strategies that integrate technical and fundamental analysis. These systems can be obtained for free, for a fee, or developed by traders with technological expertise.

There is no definitive “best” method of analysis for forex trading; the choice between technical and fundamental analysis depends on the trader’s timeframe and accessibility to information. Short-term traders may find technical analysis more suitable, while traders with real-time data access may prefer fundamental analysis ( Investopedia ).

By understanding statistical independence, developing a profitable edge, and utilizing both fundamental and technical analysis, forex traders can enhance their trading strategies and increase their chances of success in the forex business. It is important to continuously adapt and refine your approach based on market conditions and the results of your trades.

Common Mistakes in Forex Trading

When engaging in forex trading, it’s essential to be aware of common mistakes that traders often make. By understanding and avoiding these pitfalls, you can increase your chances of success in the forex market. Here are some of the key mistakes to watch out for:

Avoiding Overtrading

Overtrading is a common mistake that drains both funds and confidence. It involves excessive trading, often driven by impulsive decisions, which leads to high transaction fees and mental fatigue. Exercising restraint, trading with purpose, and avoiding the temptation of overtrading are crucial lessons in forex trading. By focusing on quality trades and maintaining discipline, traders can avoid unnecessary risks and preserve their capital.

Smart Leverage Usage

Trading with excessive leverage can be a double-edged sword. While it allows for opening large positions with a small initial deposit, it also increases the risk of losing more than the initial investment in the trading account. Understanding how to leverage smartly is crucial in forex trading. Traders should carefully assess their risk tolerance and use leverage in a controlled manner to avoid significant losses ( The5ers ).

Emotion Control and Discipline

Emotions can often cloud judgment and lead to poor trading decisions. New traders often hold onto losing positions for too long and exit winning positions prematurely due to emotions or the lack of patience. Having the discipline to make informed entries and exits based on a trading plan is essential for successful forex trading. By maintaining emotional control and adhering to a well-defined strategy, traders can make rational decisions and avoid costly mistakes.

Importance of Money Management

Proper money management is a critical aspect of successful forex trading. Amateur traders often ignore money management practices by risking more capital when facing losses. In contrast, professional traders recommend risking a set percentage of capital on each trade. This approach helps minimize the impact of losses during losing streaks and ensures long-term sustainability. By implementing effective money management techniques, traders can protect their capital and increase their profitability ( The5ers ).

Avoiding these common mistakes is vital for achieving consistent success in forex trading. By being mindful of overtrading, using leverage wisely, maintaining emotional control, and practicing proper money management, traders can enhance their trading performance and work towards executing their forex business plan effectively.

Creating a Solid Business Plan

A comprehensive and well-designed business plan is crucial when starting a forex business. It provides a roadmap for success and serves as a reference point for decision-making. The creation of a solid business plan involves various components, including market analysis, industry analysis, target market identification, and competitive landscape evaluation.

Market Analysis Overview

Market analysis is a fundamental aspect of the business plan. It involves conducting a methodical examination of the market to determine if there are enough potential customers willing to purchase the offered products or services at a profitable price point. This analysis helps in understanding the target market, consumers, market size, and consumers’ motivations. By utilizing industry data and market research, businesses can focus their sales and marketing efforts effectively. For more information on how to conduct market analysis, refer to our article on how to start a forex business .

Industry Analysis Insights

The industry analysis section of the business plan provides insights into the general characteristics of the forex business. It includes presenting statistics such as the size of the industry, industry growth rate, major industry participants, and discussing important trends that could affect the industry. By understanding the dynamics of the industry, businesses can position themselves strategically to capitalize on opportunities and navigate potential challenges. Learn more about the forex industry and its potential by exploring our article on forex business opportunity .

Target Market Identification

Identifying the target market is a critical step in developing a successful forex business plan. This involves defining the specific group of individuals or businesses that the company aims to serve. Understanding the characteristics, preferences, and needs of the target market enables businesses to tailor their products, services, and marketing strategies effectively. By conducting thorough market research and analysis, businesses can identify and target their ideal customer base. For more information on defining your target market, refer to our article on forex business license .

Competitive Landscape Evaluation

Analyzing the competitive landscape is essential for any forex business. This involves gathering intelligence about competitors’ businesses to understand the competitive environment, opportunities, and challenges. By knowing basic information about competitors and focusing on those directly competing for sales, businesses can identify their strengths, weaknesses, and unique selling propositions. Analyzing competitors’ online presence, monitoring their adaptations, product developments, and brand evolution can provide valuable insights for staying competitive in the market. To learn more about competitive analysis in the forex industry, refer to our article on forex trading business model .

By including a thorough market analysis overview, industry analysis insights, target market identification, and competitive landscape evaluation in the business plan, forex businesses can position themselves for success. These components provide a solid foundation for understanding the market, identifying opportunities, and developing effective strategies to achieve business goals.

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The Ultimate Guide to Developing a Successful Business Trading Plan

Table of Contents

Introduction

A business trading plan is a comprehensive strategy that outlines a trader’s goals, objectives, and methods for trading in the financial markets. It’s a vital tool for managing risk, identifying potential trading opportunities, and achieving long-term success. In this article, we’ll provide a step-by-step guide to developing a successful business trading plan that aligns with your goals and objectives.

Defining Your Trading Goals and Objectives

Defining your trading goals and objectives is a crucial step in developing a successful business trading plan. It provides a clear direction for your trading activities and helps you stay focused on your long-term goals. Here are some tips for defining your trading goals and objectives:

• Determine your motivation: Ask yourself why you want to trade. Are you looking for financial freedom, a new career, or simply a way to supplement your income?
• Set realistic goals: Set realistic goals that align with your motivation and resources. For example, if you’re a new trader, your goal may be to achieve consistent profits over a certain period.
• Establish a timeline: Determine a timeline for achieving your goals. This can help you stay focused and motivated, and allow you to evaluate your progress.
• Prioritize your goals: Prioritize your goals based on their importance and feasibility. Focus on achieving your most important goals first.
• Review and adjust: Continuously review and adjust your goals based on your progress and changing market conditions. Be flexible and willing to adjust your approach as needed.

Conducting Market Analysis

To develop a successful business trading plan, it’s important to conduct a thorough analysis of the market. This includes identifying market trends and patterns, analyzing economic indicators and events, and identifying potential trading opportunities. Here are some tips for conducting market analysis:

• Identify market trends and patterns: Understand the market trends and patterns that influence your trading decisions.
• Analyze economic indicators and events: Keep an eye on economic indicators and events that can impact your trades.
• Identify potential trading opportunities: Look for trading opportunities that align with your goals and objectives.

Identifying and Evaluating Trading Strategies

Identifying and evaluating trading strategies is a crucial component of developing a successful business trading plan. An effective trading strategy should align with your goals and objectives, and provide a structured approach to your trading activities. Here are some steps to identify and evaluate trading strategies:

• Research different trading strategies: There are many different trading strategies available, such as swing trading , day trading, trend following, and scalping. Research the various strategies and determine which ones align with your goals and objectives.
• Test the strategies: Once you have identified potential strategies, test them on historical data or in a demo account to evaluate their effectiveness. This can help you determine which strategies work best for you and your trading style.
• Evaluate the risk and reward: Determine the potential risks and rewards associated with each strategy. Evaluate the strategy’s win rate, average profit, and average loss to determine whether it is a viable strategy.
• Determine your resources and knowledge: Consider your resources and knowledge when selecting a strategy. For example, if you have limited time to dedicate to trading, a long-term trend-following strategy may not be suitable.
• Continuously monitor and adjust: Once you have selected a strategy, monitor its performance and make adjustments as needed. Continuously evaluate its effectiveness and adjust your approach as needed.

Risk Management Strategies

Risk management is an essential component of successful trading, as it helps traders manage potential losses and preserve their trading capital. Effective risk management strategies enable traders to limit their exposure to risk while maximizing their potential for profits. Here are some key risk management strategies that traders should consider:

• Use stop-loss orders: A stop-loss order is an instruction to sell a security when it reaches a certain price, helping traders limit their potential losses.
• Manage position sizing: Position sizing involves determining the appropriate size of a trade based on risk and potential reward. Traders should manage their position sizing to limit their exposure to risk.
• Diversify your portfolio: Diversification involves spreading your investments across different asset classes or securities to minimize your overall risk exposure.
• Set realistic profit targets: Traders should set realistic profit targets that align with their goals and objectives.
• Monitor your trades: Traders should continuously monitor their trades and adjust their risk management strategies as needed.
• Use hedging strategies: Hedging involves using financial instruments to offset potential losses in other positions. Traders should consider using hedging strategies to limit their exposure to risk.
• Understand market volatility: Traders should understand the level of volatility in the markets they trade and adjust their risk management strategies accordingly.

Trading Psychology

Trading psychology is the mental and emotional state that a trader brings to the process of trading. It includes factors such as discipline, patience, focus, and emotional control. Mastering trading psychology is a crucial component of successful trading, as it enables traders to remain objective, avoid making impulsive decisions, and stay committed to their business trading plan. Here are some tips for developing a strong trading psychology:

• Manage your emotions: Emotions can cloud your judgment and lead to impulsive decisions. Practice emotional control by avoiding emotional trading and staying disciplined.
• Stay focused: Focus on your business trading plan and avoid getting distracted by external factors such as news, opinions, or market noise.
• Develop discipline: Trading requires discipline and adherence to a plan. Develop a disciplined approach to your trading and stick to your plan.
• Avoid overconfidence: Overconfidence can lead to poor decision-making and excessive risk-taking. Stay humble and objective in your analysis and decision-making.
• Maintain a positive mindset: A positive mindset can help you overcome challenges and setbacks. Stay optimistic and focus on your long-term goals and objectives.
• Practice patience: Patience is key to successful trading. Wait for the right opportunities and avoid rushing into trades without proper analysis and planning.
• Learn from mistakes: Every trader makes mistakes. Learn from your mistakes and use them as opportunities to improve your skills and knowledge.

Backtesting and Monitoring

Backtesting and monitoring are crucial components of any successful business trading plan. Backtesting involves testing a trading strategy against historical data to evaluate its effectiveness, while monitoring involves tracking trading performance in real-time to identify areas for improvement and make adjustments as needed. Here are some tips for effectively backtesting and monitoring your trading plan:

Backtesting

• Identify the right historical data: Use historical data that is relevant to the markets and trading instruments you plan to trade.
• Use the right backtesting tools: Choose a reliable backtesting tool that provides accurate data and insights.
• Test multiple scenarios: Test your trading strategy against multiple scenarios to evaluate its effectiveness in different market conditions.
• Keep track of your results: Keep track of your backtesting results and use them to identify areas for improvement.
• Track your trading performance: Keep track of your trades and performance metrics, such as profit and loss and win/loss ratio.
• Identify areas for improvement: Analyze your trading performance and identify areas for improvement, such as adjusting your risk management strategy or refining your trading plan.
• Make adjustments as needed: Use the insights gained from monitoring to make adjustments and refine your trading plan.

By incorporating backtesting and monitoring into your trading plan, you can identify areas for improvement and make adjustments to ensure long-term success. Additionally, keeping a trading journal or using specialized trading software can help you track and analyze your trading performance more efficiently. Remember that effective backtesting and monitoring require a disciplined approach and a commitment to continuous improvement.

Implementation and Execution

After developing a comprehensive business trading plan and thoroughly backtesting and monitoring it, the next step is implementing and executing your plan. Implementation and execution are critical steps that can make or break your success as a trader. Here are some tips for effectively implementing and executing your trading plan:

• Follow your plan: Stick to your trading plan and avoid making impulsive trades or deviating from your strategy.
• Keep track of your progress: Monitor your trading performance and keep track of your progress, both in terms of profits and losses and adherence to your plan.
• Evaluate your results: Continuously evaluate your trading results and make adjustments as needed based on your performance.
• Use proper risk management: Implement proper risk management techniques to minimize potential losses and preserve your trading capital.
• Stay disciplined: Maintain a disciplined approach to your trading and avoid letting emotions cloud your judgment.
• Learn from your mistakes: Analyze your mistakes and learn from them, rather than letting them discourage you or lead to further losses.
• Continuously improve: Continuously refine your business trading plan based on your results and the lessons learned along the way.

Developing a successful business trading plan is a crucial step for achieving long-term success in the financial markets. By defining your trading goals and objectives, conducting market analysis, identifying and evaluating trading strategies, implementing risk management strategies, developing a strong trading psychology, backtesting and monitoring your business trading plan, and implementing and executing your plan, you can create a comprehensive strategy that aligns with your goals and objectives. With this guide, you’re now equipped to develop a successful business trading plan and achieve your trading goals.

Forex Brokerage Business Plan [Sample Template]

By: Author Tony Martins Ajaero

Home » Business Plans » Financial Services

Are you about starting a Forex brokerage firm? If YES, here’s a complete sample Forex brokerage business plan template & feasibility report you can use for FREE to raise money .

If you are interested in Forex (foreign exchange), one of the viable and profitable businesses that you can start along that line is a fore brokerage company. Forex brokerage firm just like any other brokerage firm is an intermediary between retail Forex traders (those who trade on foreign exchange market and the Forex market.

Forex brokerage companies provide the platform for retail Forex traders to trade Forex on the internet. The fact that you will be competing with people from all over the globe is enough reason for you to be creative with your Forex brokerage firm.

In order to attract Forex traders you should ensure that your Forex trading platform is user friendly and the payment portal is secured. It is also very important that you make the withdrawal process seamless for your clients (retail Forex traders).

A Sample Forex Brokerage Firm Business Plan Template

1. industry overview.

The financial services industry is indeed a broad industry and one of the active line of businesses in the industry that any entrepreneur who have solid understanding on how foreign exchange works is to either start a Forex brokerage firm or to launch an online Forex trading business.

A non-bank foreign exchange company also known as foreign exchange broker or simply Forex broker is a company that offers currency exchange and international payments to private individuals and companies. The term is typically used for currency exchange companies that offer physical delivery rather than speculative trading. i.e., there is a physical delivery of currency to a bank account.

As a Forex brokerage company, your responsibility is to provide Forex trading platform for retail Forex traders. So what you need to do is to hire experts to help you develop a user friendly Forex trading platform. Your trading platform must be secured and easy to navigate.

It is also important to make use of secured payment portal and also Forex traders should be able to withdraw their earnings without stress.

The truth is that the numbers of people that register and trade on your Forex trading platform is what will determine the money you will make. In order to attract people to your trading platform, you should develop Forex trading demo; a learning tool for Forex trading.

The Forex Brokerage Services industry is indeed in a mature stage of its growth. The industry is characterized by growth in line with the overall outlook of the economy, consolidation from the largest players in the industry and wholehearted market acceptance of industry products (currencies from different nations) and services.

The Forex Brokerage services line of business will continue to be in high demand by business establishment in the united states, most especially as the number of businesses and international trade increases. Manufacturing industries and other corporate organizations are also expected to continue to source for Forex especially when they are involved in intentional trade or have international business partners.

The Forex Brokerage Services industry is indeed a large industry and pretty much active in countries such as United States of America, United Kingdom, France, Italy, Nigeria, South Africa Japan, China, Germany, and Canada et al.

Over and above, starting a Forex brokerage firm requires professionalism and good grasp of our foreign exchange works on a global platform.

Besides, you would need to get the required certifications and license and also meet the standard capitalization for such business before you can be allowed to start a Forex brokerage firm in the United States; the industry is heavily regulated to guide against fraud and criminality.

2. Executive Summary

Freeman Jones Forex Brokerage Firm, LLC is a registered and licensed Forex brokerage company that will be located in the heart of Las Vegas – Nevada. The company will be involved in dealing in currencies from leading countries of the world whose currencies are traded in the United States of America.

Aside from the fact that we will serve as a bureau de change for business and individuals who want to buy or sell foreign currencies, we will also engage in Forex trading on the internet. We are aware that to run an all – round and standard Forex brokerage firm can be demanding which is why we are well trained, certified and equipped to perform excellently well.

Freeman Jones Forex Brokerage Firm, LLC is a client – focused and result driven Forex brokerage firm that will buy and sale Forex from leading nations, trade Forex online for clients and also provide broad- based Forex services at an affordable fee that won’t in any way put a hole in the pocket of our clients.

We will offer a standard and professional Forex services to all to our individual clients, and corporate clients. We will ensure that we work hard to meet and surpass our clients’ expectations whenever they patronize our services.

At Freeman Jones Forex Brokerage Firm, LLC, our client’s best interest would always come first, and everything we do is guided by our values and professional ethics. We will ensure that we hire professionals who are well experienced in the Forex bureau firms industry with strong bias in online Forex trading.

Freeman Jones Forex Brokerage Firm, LLC will at all times demonstrate her commitment to sustainability, both individually and as a firm, by actively participating in our communities and integrating sustainable business practices wherever possible.

We will ensure that we hold ourselves accountable to the highest standards by meeting our client’s needs precisely and completely. We will cultivate a working environment that provides a human, sustainable approach to earning a living, and living in our world, for our partners, employees and for our clients.

Our plan is to position the business to become the leading brand in the Forex brokerage services line of business in the whole of Nevada, and also to be amongst the top 20 Forex brokerage firms in the United States of America within the first 10 years of fully launching the business.

This might look too tall a dream but we are optimistic that this will surely be realized because we have done our research and feasibility studies and we are enthusiastic and confident that Las Vegas is the right place to launch our Forex brokerage cum Forex trading company before sourcing for clients from other cities in The United States of America.

Freeman Jones Forex Brokerage Firm, LLC is founded by, Mr. Freeman Jones and his family. Freeman Jones is Forex trader per excellence with adequate results to show for it.

He has well over 15 years of experience working at various capacity within the financial consulting industry with strong bias for Forex in the United States of America. Mr. Freeman Jones graduated from both University of California – Berkley with a Degree in Accounting, and University of Harvard (MSc. Finance) and he is a chartered account.

3. Our Products and Services

Freeman Jones Forex Brokerage Firm, LLC is going to offer varieties of services within the scope of the Forex brokerage services industry in the United States of America and of course on the global stage. Our intention of starting our Forex brokerage firm in Las Vegas – Nevada is to leverage on the opportunities available in the city.

We are well prepared to make profits from the industry and we will do all that is permitted by the law in the United States to achieve our business goals, aim and ambition. Our business offering are listed below;

• Trade Forex on behalf of our clients ( both corporate clients and individual clients )
• Buy and sell Forex from leading countries of the world
• Provide other related Forex and financial consulting and advisory services

4. Our Mission and Vision Statement

• Our vision is to build a Forex brokerage services brand that will become the number one choice for individuals, smaller businesses and corporate clients in the whole of Las Vegas – Nevada. Our vision reflects our values: integrity, security, service, excellence and teamwork.
• Our mission is to provide professional, reliable and trusted Forex trading and Forex brokerage services that assist start – ups, corporate organization, manufacturing companies and non-profit organizations in sorting out their foreign exchange and financial related concerns.
• We will position the business to become the leading brand in the bookkeeping and payroll services line of business in the whole of Nevada, and also to be amongst the top 20 bookkeeping and payroll services firms in the United States of America within the first 10 years of operations.

Our Business Structure

Freeman Jones Forex Brokerage Firm, LLC, is a Forex brokerage cum Forex trading firm that intend starting small in Las Vegas – Nevada, but hope to grow big in order to compete favorably with leading Forex brokerage cum Forex trading firms in the industry both in the United States and on a global stage.

We are aware of the importance of building a solid business structure that can support the picture of the kind of world class business we want to own. This is why we are committed to only hire the best hands within our area of operations.

Ordinarily we would have settled for two or three staff members and settle for just online Forex trading services, but as part of our plan to build a standard Forex brokerage services firm in Las Vegas – Nevada that will also be involved in buying and selling of Forex, hence we have perfected plans to get it right from the beginning.

The picture of the kind of Forex brokerage services business we intend building and the business goals we want to achieve is what informed the amount we are ready to pay for the best hands available in and around Las Vegas – Nevada as long as they are willing and ready to work with us to achieve our business goals and objectives.

At Freeman Jones Forex Brokerage Firm, LLC, we will ensure that we hire people that are qualified, hardworking, and creative, result driven, customer centric and are ready to work to help us build a prosperous business that will benefit all the stake holders (the owners, workforce, and customers).

As a matter of fact, profit-sharing arrangement will be made available to all our senior management staff and it will be based on their performance for a period of five years or more as agreed by the board of trustees of the company. In view of the above, we have decided to hire qualified and competent hands to occupy the following positions;

• Chief Executive Officer
• Forex Traders / Consultants

Admin and HR Manager

Marketing and Sales Executive

• Customer Care Executive / Front Desk Officer

5. Job Roles and Responsibilities

Chief Executive Office:

• Increases management’s effectiveness by recruiting, selecting, orienting, training, coaching, counseling, and disciplining managers; communicating values, strategies, and objectives; assigning accountabilities; planning, monitoring, and appraising job results; developing incentives; developing a climate for offering information and opinions; providing educational opportunities.
• Creates, communicates, and implements the organization’s vision, mission, and overall direction – i.e. leading the development and implementation of the overall organization’s strategy.
• Responsible for fixing prices and signing business deals
• Responsible for providing direction for the business
• Responsible for signing checks and documents on behalf of the company
• Evaluates the success of the organization

Forex Traders / Forex Consultants

• Responsible for trading Forex for the organization and for our clients under the firm’s platform
• Handle business activities such as buying and selling Forex from leading countries of the world in a highly professional manner
• Responsible for ensuring that all Forex transactions whether it is cash transaction or online credit transaction are recorded in the correct daybook, supplier’s ledger, customer ledger, and general ledger
• Provides other related Forex and financial consulting and advisory services
• Responsible for overseeing the smooth running of HR and administrative tasks for the organization
• Designs job descriptions with KPI to drive performance management for clients
• Regularly hold meetings with key stakeholders to review the effectiveness of HR Policies, Procedures and Processes
• Maintains office supplies by checking stocks; placing and expediting orders; evaluating new products.
• Ensures operation of equipment by completing preventive maintenance requirements; calling for repairs.
• Defines job positions for recruitment and managing interviewing process
• Carries out staff induction for new team members
• Responsible for training, evaluation and assessment of employees
• Responsible for arranging travel, meetings and appointments
• Updates job knowledge by participating in educational opportunities; reading professional publications; maintaining personal networks; participating in professional organizations.
• Oversee the smooth running of the daily office activities.
• Identifies, prioritizes, and reaches out to new partners, and business opportunities et al
• Identifies development opportunities; follows up on development leads and contacts; participates in the structuring and financing of projects; assures the completion of relevant projects.
• Writes winning proposal documents, negotiate fees and rates in line with company policy
• Responsible for handling business research, marker surveys and feasibility studies for clients
• Responsible for supervising implementation, advocate for the customer’s needs, and communicate with clients
• Develops, executes and evaluates new plans for expanding increase sales
• Documents all customer contact and information
• Represents the company in strategic meetings
• Helps increase sales and growth for the company
• Responsible for preparing financial reports, budgets, and financial statements for the organization
• creates reports from the information concerning the financial transactions recorded by the bookkeeper
• Prepares the income statement and balance sheet using the trial balance and ledgers prepared by the bookkeeper.
• Provides managements with financial analyses, development budgets, and accounting reports; analyzes financial feasibility for the most complex proposed projects; conducts market research to forecast trends and business conditions.
• Responsible for financial forecasting and risks analysis.
• Performs cash management, general ledger accounting, and financial reporting for one or more properties.
• Responsible for developing and managing financial systems and policies
• Responsible for administering payrolls
• Ensures compliance with taxation legislation
• Handles all financial transactions for the company
• Serves as internal auditor for the company

Client Service Executive / Front Desk Officer

• Welcomes guests and clients by greeting them in person or on the telephone; answering or directing inquiries.
• Ensures that all contacts with clients (e-mail, walk-In center, SMS or phone) provides the client with a personalized customer service experience of the highest level
• Through interaction with clients on the phone, uses every opportunity to build client’s interest in the company’s products and services
• Manages administrative duties assigned by the manager in an effective and timely manner
• Consistently stays abreast of any new information on the company’s products, promotional campaigns etc. to ensure accurate and helpful information is supplied to clients
• Receives parcels / documents for the company
• Distribute mails in the organization
• Handles any other duties as assigned my the line manager

6. SWOT Analysis

Freeman Jones Forex Brokerage Firm, LLC engaged the services of a core professional in the area of business consulting and structuring to assist our organization in building a well – structured Forex brokerage cum Forex trading firm that can favorably compete in the highly competitive Forex market in the United States and the world at large.

Part of what the team of business consultant did was to work with the management of our organization in conducting a SWOT analysis for Freeman Jones Forex Brokerage Firm, LLC. Here is a summary from the result of the SWOT analysis that was conducted on behalf of Freeman Jones Forex Brokerage Firm, LLC;

Our core strength lies in the power of our team; our workforce. We have a team that can go all the way to give our clients value for their money; a team that are trained and equipped to pay attention to details and to deliver excellent returns whenever our clients engage our services to trade Forex for them. We are well positioned and we know we will attract loads of clients from the first day we open our doors for business.

As a new Forex brokerage cum Forex trading firm in Las Vegas – Nevada, it might take some time for our organization to break into the market and gain acceptance especially from corporate clients in the already saturated Forex brokerage services industry; that is perhaps our major weakness.

So also, we may not have the required cash to leverage on the opportunities of buying huge Forex as permitted by the law of the United States when such opportunity present itself to us. So also, we may not have enough budget to give our business the kind of publicity we would have loved to.

• Opportunities:

The opportunities in the Forex brokerage services industry is massive considering the number of individuals especially students, players in the manufacturing sector, importers and exporters, start – ups and of course corporate organizations who can’t afford to do without the services of Forex brokerage cum Forex trading companies.

As a standard and well – positioned Forex brokerage cum Forex trading firm, we are well – equipped and ready to take advantage of any opportunity that comes our way.

Some of the threats that we are likely going to face as a Forex brokerage cum Forex trading firm operating in the United States are unfavorable government policies , the arrival of a competitor within our location of operations and global economic downturn which usually affects purchasing / spending power. There is hardly anything we can do as regards these threats other than to be optimistic that things will continue to work for our good.

7. MARKET ANALYSIS

• Market Trends

The Forex brokerage cum Forex trading services industry is indeed a very large industry and of course it is one industry that works for businesses across different industries. If you are conversant with the trend in the Forex brokerage cum Forex trading industry, you will agree that loads of businesses but in the United States and in other part of the world are becoming active in international trades hence the increase demand for Forex.

The truth is that, a company in the manufacturing sector that depend on raw materials from the international market, or a company actively involved in importing and exporting and of course international tourist and international students et al cannot effectively operate their business or fit into a new country without having the currency of the host nation.

Another notable trend in the Forex brokerage services industry is that in the last five years, the industry has performed impressively as a large reduction in unemployment boosted the revenue generated in the industry.

So also, the Forex brokerage services cum Forex trading industry has benefited from the advancement of online Forex trading software and platforms, with new cloud-based offerings providing a new revenue stream for operators, and attracting new customers. Going forward, increasing product penetration and of course an expanding customer base is expected to drive growth in the industry.

8. Our Target Market

The demographic and psychographics composition of those who need the services of Forex brokerage cum Forex trading firms cuts across individuals, small businesses and large corporations.

Freeman Jones Forex Brokerage Firm, LLC will initially serve small to medium sized business, from new ventures to well established businesses and individual clients, but that does not in any way stop us from growing to be able to compete with the leading Forex brokerage service firms in the United States.

As a standard and licensed Forex brokerage cum Forex trading service firm, Freeman Jones Forex Brokerage Firm, LLC offers a wide range of Forex related services hence we are well trained and equipped to services a wide range of clientele base.

Our target market cuts across businesses of different sizes and industries. We are coming into the industry with a business concept that will enable us work with individuals, small businesses and bigger corporations in and around Las Vegas – Nevada and other cities in the United States of America. Below is a list of the businesses and organizations that we have specifically design our products and services for;

• Manufacturing Companies
• Blue Chips Companies
• Corporate Organizations
• International businessmen and businesswomen
• International Students
• Importers and exporters
• International Tourists and visitors
• Individuals
• Entrepreneurs and Start – Ups

Our Competitive Advantage

The level of competitions in the Forex brokerage services industry does not in any way depend on the location of the business since most people on that trade Forex can operate from any part of the world and still effectively compete in the Forex trading platforms.

We are quite aware that to be highly competitive in the Forex brokerage services industry means that we should be able to make available Forex from leading countries of the world and also to produce results and give good returns on investments when our clients, both individual clients and corporate clients give us Forex to trade on their behalf.

Freeman Jones Forex Brokerage Firm, LLC might be a new entrant into the Forex brokerage services industry in the United States of America, but the management staffs and owners of the business are considered gurus. They are people who are core professionals and licensed and highly qualified Forex traders in the United States. These are part of what will count as a competitive advantage for us.

Lastly, our employees will be well taken care of, and their welfare package will be among the best within our category (start – ups Forex brokerage cum Forex trading firms) in the industry meaning that they will be more than willing to build the business with us and help deliver our set goals and achieve all our aims and objectives.

9. SALES AND MARKETING STRATEGY

• Sources of Income

Freeman Jones Forex Brokerage Firm, LLC is established with the aim of maximizing profits in the Forex brokerage services industry and we are going to go all the way to ensure that we do all it takes to attract both corporate and individual clients on a regular basis.

Freeman Jones Forex Brokerage Firm, LLC will generate income by offering the following Forex trading cum Forex brokerage services for individuals, manufacturing companies, NGOs and for corporate organizations;

• Trade Forex on behalf of our clients (both corporate clients and individual clients)

10. Sales Forecast

We are well positioned to take on the available market in Las Vegas – Nevada and on our online platforms and we are quite optimistic that we will meet our set target of generating enough income / profits from the first six month of operations and grow the business and our clientele base beyond Las Vegas to other cities in Nevada and other states in the U.S.

We have been able to critically examine the Forex brokerage cum Forex trading market and we have analyzed our chances in the industry and we have been able to come up with the following sales forecast. The sales projection is based on information gathered on the field and some assumptions that are peculiar to startups in Las Vegas – Nevada.

Below is the sales projection for Freeman Jones Forex Brokerage Firm, LLC, it is based on the location of our business and the wide range of financial consulting services that we will be offering;

• First Year-: $250,000
• Second Year-: $550,000
• Third Year-: $950,000

N.B: This projection is done based on what is obtainable in the industry and with the assumption that there won’t be any major economic meltdown and natural disasters within the period stated above. There won’t be any major competitor offering same additional services as we do within same location. Please note that the above projection might be lower and at the same time it might be higher.

• Marketing Strategy and Sales Strategy

We are mindful of the fact that there is stiffer competition amongst Forex brokerage firms cum Forex trading firms in the United States of America; hence we have been able to hire some of the best business developer to handle our sales and marketing.

Our sales and marketing team will be recruited base on their vast experience in the industry and they will be trained on a regular basis so as to be well equipped to meet their targets and the overall goal of the organization.

We will also ensure that our excellent service deliveries speaks for us in the market place; we want to build a standard bookkeeping and payroll service business that will leverage on word of mouth advertisement from satisfied clients (both individuals and corporate organizations).

Our goal is to grow our Forex brokerage services firm to become one of the top 20 Forex brokerage firms in the United States of America which is why we have mapped out strategy that will help us take advantage of the available market and grow to become a major force to reckon with not only in the Las Vegas but also in other cities in the United States of America.

Freeman Jones Forex Brokerage Firm, LLC is set to make use of the following marketing and sales strategies to attract clients;

• Introduce our business by sending introductory letters alongside our brochure to corporate organizations, schools with international students, players in the manufacturing sector, importers and exporters, international tourists and other key stake holders in Las Vegas and other cities in Nevada.
• Advertise our business in relevant financial and business related magazines, newspapers, TV stations, and radio station.
• List our business on yellow pages ads (local directories)
• Attend relevant international and local Forex, finance and business expos, seminars, and business fairs et al
• Create different packages for different category of clients (start – ups and established corporate organizations) in order to work with their budgets and still deliver profits to them they hire our services to trade Forex on their behalf
• Leverage on the internet to promote our business
• Engage direct marketing approach
• Encourage word of mouth marketing from loyal and satisfied clients

11. Publicity and Advertising Strategy

We have been able to work with our brand and publicity consultants to help us map out publicity and advertising strategies that will help us walk our way into the heart of our target market. We are set to take the financial consulting services industry by storm which is why we have made provisions for effective publicity and advertisement of our Forex brokerage cum Forex trading firm.

Below are the platforms we intend to leverage on to promote and advertise Freeman Jones Forex Brokerage Firm, LLC;

• Place adverts on both print (community based newspapers and magazines) and electronic media platforms; we will also advertise our Forex brokerage company on financial magazines and other relevant financial programs on radio and TV
• Sponsor relevant community based events / programs
• We will leverage various online platforms to promote the business. It makes it easier for people to enter our website (Forex trading platform) with just a click of the mouse. We will take advantage of the internet and social media platforms such as; Instagram, Facebook , twitter, YouTube, Google + et al to promote our brand
• Install our Bill Boards on strategic locations all around Las Vegas – Nevada.
• Engage in road show from time to time all around Las Vegas – Nevada to promote our brand
• Distribute our fliers and handbills in target areas all around Las Vegas – Nevada
• Ensure that all our workers wear our branded shirts and all our vehicles are well branded with our company’s logo et al.

12. Our Pricing Strategy

It is a fact that Forex trading both online and offline is driven by the demand of a certain currency which is why the prices cannot be fixed; prices for Forex fluctuates on a regular basis.

At Freeman Jones Forex Brokerage Firm, LLC we will keep the prices of our services below the average market rate for all of our customers by keeping our overhead low and by collecting payment in advance from corporate organizations who would hire our services. In addition, we will also offer special discounted rates to all our customers at regular intervals.

• Payment Options

At Freeman Jones Forex Brokerage Firm, LLC our payment policy will be all inclusive because we are quite aware that different people prefer different payment options as it suits them. Here are the payment options that we will make available to our clients;

• Payment by via bank transfer
• Payment via online bank transfer
• Payment via check
• Payment via bank draft
• Payment with cash

In view of the above, we have chosen banking platforms that will help us achieve our plans with little or no itches.

13. Startup Expenditure (Budget)

Starting a Forex brokerage cum Forex trading firm can be cost effective; this is so because on the average, you are not expected to acquire expensive machines and equipment.

Aside from the working capital or capitalization as is required by the regulating body, basically what you should be concerned about is the amount needed to secure a standard office facility in a good and busy business district, the amount needed to furniture and equip the office, the amount to purchase the required software applications, the amount needed to pay bills, promote the business and obtain the appropriate business license and certifications.

This is the financial projection and costing for starting Freeman Jones Forex Brokerage Firm, LLC;

• The Total Fee for incorporating the Business in the United States of America – $750.
• The budget for basic insurance policy covers, permits and business license – $2,500
• The Amount needed to acquire a suitable Office facility in a business district 6 months (Re – Construction of the facility inclusive) – $40,000.
• The amount required for capitalization (working capital) – $50,000
• The Cost for equipping the office (computers, software applications, printers, fax machines, furniture, telephones, filing cabins, safety gadgets and electronics et al) – $5,000
• The cost for purchase of the required software applications (CRM software, Accounting and Bookkeeping software and Payroll software et al) – $10,500
• The Cost of Launching your official Website – $600
• Budget for paying  at least three employees for 3 months plus utility bills – $10,000
• Additional Expenditure (Business cards, Signage, Adverts and Promotions et al) – $2,500
• Miscellaneous: $1,000

Going by the report from the market research and feasibility studies conducted, we will need over one hundred and fifty thousand (200,000) U.S. dollars to successfully set – up a medium scale but standard Forex brokerage cum Forex trading services firm in the United States of America.

It is important to state that the testing and evaluating expenses would be high because of the large amount needed as working capital.

Generating Funding / Startup Capital for Freeman Jones Forex Brokerage Firm, LLC

Freeman Jones Forex Brokerage Firm, LLC is a business that will be owned and managed by Freeman Jones and his immediate family members. They are the sole financial of the firm, but may likely welcome partners later which is why they decided to restrict the sourcing of the start – up capital for the business to just three major sources.

These are the areas we intend generating our start – up capital;

• Generate part of the start – up capital from personal savings
• Source for soft loans from family members and friends
• Apply for loan from my Bank

N.B: We have been able to generate about $50,000 (Personal savings $40,000 and soft loan from family members $10,000) and we are at the final stages of obtaining a loan facility of $150,000 from our bank. All the papers and document has been duly signed and submitted, the loan has been approved and any moment from now our account will be credited.

14. Sustainability and Expansion Strategy

The future of a business lies in the numbers of loyal customers that they have the capacity and competence of the employees, their investment strategy and the business structure. If all of these factors are missing from a business (company), then it won’t be too long before the business close shop.

One of our major goals of starting Freeman Jones Forex Brokerage Firm, LLC is to build a business that will survive off its own cash flow without the need for injecting finance from external sources once the business is officially running.

We know that one of the ways of gaining approval and winning customers over is to offer our Forex brokerage cum Forex trading services a little bit cheaper than what is obtainable in the market and we are well prepared to survive on lower profit margin for a while.

Freeman Jones Forex Brokerage Firm, LLC will make sure that the right foundation, structures and processes are put in place to ensure that our staff welfare are well taken of. Our company’s corporate culture is designed to drive our business to greater heights and training and re – training of our workforce is at the top burner of our business strategy.

As a matter of fact, profit-sharing arrangement will be made available to all our management staff and it will be based on their performance for a period of three years or more as determined by the board of the organization. We know that if that is put in place, we will be able to successfully hire and retain the best hands we can get in the industry; they will be more committed to help us build the business of our dreams.

Check List / Milestone

• Business Name Availability Check : Completed
• Business Incorporation: Completed
• Opening of Corporate Bank Accounts various banks in the United States: Completed
• Opening Online Payment Platforms: Completed
• Application and Obtaining Tax Payer’s ID: In Progress
• Application for business license and permit: Completed
• Purchase of All form of Insurance for the Business: Completed
• Conducting Feasibility Studies: Completed
• Generating part of the start – up capital from the founder: Completed
• Applications for Loan from our Bankers: In Progress
• Writing of Business Plan: Completed
• Drafting of Employee’s Handbook: Completed
• Drafting of Contract Documents: In Progress
• Design of The Company’s Logo: Completed
• Graphic Designs and Printing of Packaging Marketing / Promotional Materials: Completed
• Recruitment of employees: In Progress
• Purchase of the Needed software applications, furniture, office equipment, electronic appliances and facility facelift: In Progress
• Creating Official Website for the Company: In Progress
• Creating Awareness for the business (Business PR): In Progress
• Health and Safety and Fire Safety Arrangement: In Progress
• Establishing business relationship with vendors and key players in the industry: In Progress

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Forex Training Group

Setting up your forex trading business for success.

Forex Trading Articles

One of the most popular and fastest growing segments within the trading industry is the foreign exchange market. There are many benefits for individuals interested in pursuing forex trading as a business. However, it is certainly not a get-rich-quick scheme as some gurus have made it out to be. Instead, it is a business model that can provide a solid income opportunity for those who are prepared to put in the necessary work to achieve success.

Why Start A Forex Trading Business?

In this lesson, you will learn all about the forex business opportunity. Before we begin to discuss the proper way to set up and run your forex trading business, let’s briefly touch upon some of the reasons why it’s a good opportunity to make additional income . Some beginners may have aspirations to make their currency trading business a full-time occupation, while others are more interested in getting into the forex business as a side hustle. Either way, the foreign exchange market can provide for a lucrative income for successful traders.

In the past, the currency markets were the exclusive domain of big banks and large institutions. But over the last 20 years or so, the forex market has become more available and accessible to retail investors. These days, you can begin trading the FX market with as little as $500 or $1000.

Although many brokerage firms will allow you to open an account which such small minimums, it’s advisable to save up at least several thousand dollars or an equivalent sum to get the biggest bang for your buck in your forex business. And so one of the major benefits to starting your own online currency trading business is the limited starting capital required.

Unlike some other types of investments and business ventures out there, such as real estate and brick and mortar businesses that require a relatively long period of time before you can begin to earn a descent return on your investment or recoup your original investment, the foreign exchange trading business can allow you to start generating income from day one.

Another big benefit when comparing a currency business with other traditional types of businesses is that there is no need to have to deal with clients, tenants, vendors, or employees. This is an ideal business wherein there is no ceiling to the amount of income you can generate and be able to do so as a one man or woman operation.

Another noteworthy benefit of entering the foreign exchange trading business is that you can do so at your own pace and work schedule. Most forex traders started off trading the markets while holding down a full-time job. This is completely doable, and actually the recommended path for most the majority of people interested in gaining exposure to the FX trading arena.

Since the FX markets are open 24 hours a day, five days a week, you will always be able to find time to do your market analysis and place your pending orders in the market. And this is especially true if you are focusing on trading the higher time frames such as the four hour, eight hour, and daily charts .

Get The Right Forex Trading Education

Once you’ve made the important decision that you would like to pursue a currency trading business, you will need to start taking the necessary steps to familiarize yourself with basic trading mechanics and the different types of trading strategies. The best way to start this journey is by learning about both technical and fundamental analysis .

Once you’ve had a sufficient amount of exposure to both, you will get a sense of what style of market analysis that you are more comfortable with. This is an important step in the process because the strategy for trading in the markets should be aligned with your own psychology. This is something that all traders will learn sooner or later, so it’s important that you take some time to evaluate your own strengths and weaknesses, so that you can focus on a methodology that is best suited for you.

One of the best ways to get this market exposure is by reading high quality currency trading blogs, viewing trading lessons on YouTube, and subscribing to a few notable forex related podcasts. All of these types of educational materials will be freely available to you.

From here, you will need to expand on your trading knowledge, and one of the best ways to do that is to sign up for a premium trading course. This is because most of the free trading material out there will be fairly basic and introductory in nature. This however, will not be sufficient in most cases to get you to consistency or profitability in the markets .

As such, an in-depth trading course from a reputable source is highly recommended. Now, the unfortunate news for many forex traders is that there is a vast quantity of low-quality trading courses out there, and only a handful of high quality recommended trading courses. As such, it’s imperative that you spend the time and do the proper due diligence to ensure that you are learning from a trader who actually provides valuable training material that will help you excel.

Trading courses are great in that you can work through them based on your own time schedule. However for some, a trading mentor or coach may provide for a better solution. Now most trading coaches will only offer their services to students who have already completed their course material, but others may take on new coaching relationships without any prerequisites.

In any case, an experienced trading coach will help guide you through the most important aspects of succeeding in your foreign exchange business. This can include coaching on topics such as trade setups, money management, risk reduction strategies, controlling emotions in the market , and more.

Setting Up The Proper Trading Infrastructure

The primary infrastructure that you will require for your FX trading business will be a computer, an internet connection, and a trading and charting software application. And so, a forex trading startup is relatively easy to set up. However, you must ensure that the components of your trading infrastructure are sound and best aligned for your style of trading. Generally speaking, scalpers and day traders will require a more robust set up compared to swing traders and position traders.

Let’s take a look at some of the technology that you will need in your trading business, We will assume that you will be starting off as a part-time trader.

So what type of computer system should you have for your forex trading business? Well, first and foremost it’s recommended that you trade with a desktop computer station, and one which has a solid-state drive, a quad core with at least 3 GHz, and preferably 16 GB or higher of RAM. A dual monitor setup would be a great addition to this workstation set up.

Now, if your budget does not allow for such a set up, then you might want to skip the multi-monitor option. You can always upgrade to it at some later point if you decide to. I would not, however, compromise too much on the processing power or memory capacity. This is because in order for your trading platform to process incoming data and run as efficiently as possible, you will need to meet this minimum requirement for the most part.

Now as far as your Internet connection goes, you’ll want to check with your provider to see the different product offerings they have. Also depending on your country and location, you may or may not be able to get access to the fastest Internet connections. Having said that, it is best to look for a solution that offers a minimum of 50 Mbps download service. If you reside near a major city, then this should not pose any issue for you. And as such, you may be able to enjoy service offerings of 200 or 300 Mbps in your area.

Last but certainly not least is the trading platform that you will use to execute your trading orders. Additionally if you will be using technical analysis as your primary market analysis approach, you will require a charting package as well. Some traders prefer to utilize their forex broker’s platform for both trade execution and charting. This can work based on your specific methodology, however, is not always the best solution for those who are looking for a more advanced technical analysis charting solution. As such, you may opt to have a separate charting software to perform your market analysis.

Choosing A Reliable Forex Broker

Selecting the right broker for your currency trading business is an essential ingredient to your trading success. Many beginning traders overlook the necessary due diligence required in selecting a suitable forex trading broker. These aspiring market traders make the mistake of believing that the majority of currency brokers within their jurisdiction are pretty much the same. While this may be true within certain countries or regions, is not necessarily what you want to assume.

So what are the characteristics that you should be looking for when selecting the right FX broker for your trading business? Well first and foremost, you want the broker that you’re doing business with to be regulated by a major government agency or body. For example, in the United States, the National Futures Association, and the Commodity Futures Trading Commission are responsible for licensing and monitoring the activities of foreign exchange brokers in the United States.

Similarly, the Financial Conduct Authority, also known as FCA, is tasked with this oversight responsibility of forex brokers within the United Kingdom. You’ll want to check within your specific jurisdiction to see who the primary regulatory body is and confirm that your short list of brokers are in fact licensed to do business by the specific governing body.

Another consideration when choosing a Forex broker for your trading business is the transaction cost component and the brokers primary business model. In other words, you will want to know whether your Forex broker works under the market-making model , the STP model, the ECN model, or some other hybrid variation.

Each of these different types of forex broker models will result in varying costs as it relates to bid ask spreads , and other related transaction costs.

The preferred forex broker model is the ECN model. Under this arrangement, client orders are automatically matched with minimal intervention by the forex broker, often resulting in the tightest bid ask spreads. Although it’s not necessary to trade with an ECN broker, it can greatly enhance your bottom line especially if you trade frequently.

Aside from these more concrete features that you will want from your forex broker, there are also some less tangible types of features that you may want to consider. For example, what type of customer service does your forex broker offer? It may be important for you to get assistance from time to time in a language outside of English. Some traders offer customer service, and chat features in a myriad of languages while others don’t.

What about the broker’s other offerings and features? Do they have a proprietary indicator or study that might help your trading, such as a sentiment indicator ? What about educational training and webinars? These are all important questions that should be addressed when narrowing down your list of brokers.

Create A Currency Trading Plan

One of the critical steps in setting up your forex online business is to create a detailed trading plan . Essentially, a trading plan is a business plan specifically tailored for your forex business. In it, you will outline all of the particulars of your trading business including things such as your trading set ups along with clearly defined rules for entering, and exiting positions. In addition to this your trading plan should outline which markets that you plan on trading, and what time frames that you will focus on.

Furthermore, your forex business plan should provide for contingency plans in case your strategy begins to deteriorate, or you reach your maximum allowable drawdown limit. Similarly, on the flipside of the coin, you should also have a stated plan for handling trading profits.

You may for example, decide to withdraw half of your trading profits, and leave the balance in your trading account for capital growth purposes. In any case, you must write down all of these points in your trading plan and refer to it on a periodic basis to ensure that you remain accountable to your stated goals.

Aside from the obvious benefits of helping you stay more focused in your trading business, a properly created trading plan will help reduce your chances of falling into emotional traps, that are often the result of poor planning or lack of planning altogether. The mere act of writing down your intended trade related processes will help reinforce positive habits in your mind.

You should get to a place where any time you deviate from your intended process, it should make you feel uncomfortable to the point where you remind yourself of the pre-planned course of action you should be taking. This obviously takes some time and you will need to be intimately familiar with your outlined plan, but it is nevertheless, the first step towards effortless trading.

Practice Trading Your Strategy

It’s often said that practice makes perfect. And, as in many different aspects of life, this adage certainly applies to forex trading. In many respects, practicing your trading methodology within a demo account, can mean the difference between ultimately achieving success in the markets, and falling by the wayside.

In other words, you only want to commit your hard earned capital in the live market environment after you have had ample time to develop and test your trading ideas . Practice trading in a virtual account provides you this opportunity. And what’s more, most forex brokers will provide a demo account to you at no cost whatsoever. This is true of most brokers that offer the Metatrader trading platform.

When you take the time to properly apply your trade methodology within your demo account, you’ll be able to get a feel for the different metrics around your strategy. This includes your average win rate, your average win amount to average loss amount ratio, your largest win amount, your largest loss amount, maximum drawdown , and much more.

There are several reasons why knowing these data points are important. But the most important reason would be that once you become more familiar with the hard numbers behind your trading strategy, you will be more likely to stick with that strategy for the long-term, assuming that it is providing returns within the expected range.

Now having said that, there are some downsides to demo trading. The first of these disadvantages is that a simulated trading account will not necessarily duplicate conditions within the real trading environment. That is to say that many demo trading platforms will automatically fill your orders at certain price levels, without taking into consideration the true order flow that exists in the market.

This can have a drastic impact on your entry, stop loss, and target levels reported within your demo trading account as compared to what you may have really achieved within a live trade account. It is something that a demo trader should be aware of and try to compensate for as much as possible.

Another drawback to practice trading that needs to be addressed here is that it can lead to unrealistic expectations due to the absence of emotions inherent when demo trading an account as compared to trading with real money. That is to say that you can trade the same methodology within a demo account versus a live account, and yet get vastly different results.

This is because in the real trading environment there are psychological factors that can and do come into play which may force us to make decisions that we may not ordinarily within a paper trading account. Essentially, a trader can act very differently when real money is on the line.

Start Trading With Real Money

When you feel confident to move from a demo trading account to a live trading account, you should keep a few key points in mind that will help you in the transition.

Keep in mind there will be a big psychological shift when you move from demo trading to real money trading. Anytime we are risking our hard earned money, there can be a tendency for our emotions to drive our decisions. And so, there are a few ways to guard against the adverse effects of emotions within our forex trading business.

Starting off with a relatively small trading account would be the first step towards making a smooth transition. In other words, if you have allocated $3000 to start trading with, you may want to transfer just half that amount into your trading account, and leave the other half as a reserve.

This is advisable because as a new live trader, you will be learning the ropes while you’re trying to earn a reasonable return on capital. Think of it as an insurance policy just in case you go through a series of losses or realize an unexpected blow to your account. The funds that you socked away will bring new life to your FX and CFD business at a time when you may need it the most.

Along the same lines, another risk reduction strategy that you should consider employing is incorporating a fixed percentage risk per trade model. That is to say that you should only commit to a fixed percentage of your trading capital to any particular trade. That could be 2%, 3%, 4%, or some other fixed percentage. As a general guideline, risking 2 to 3% of your trading capital should be your maximum limit.

Anything beyond that would be much too aggressive, and make it increasingly difficult to overcome a large drawdown. So even though this may mean that you will be trading microlots, or minilots, instead of standard lot sizes , it is the best course of action when starting your forex trading business. As you gain more experience in the markets, you will come to realize that capital preservation is the most important job of a forex trader. Every other trading goal or priority should be viewed in light of this all-important rule of trading.

Journal Your Trades And Keep Refining

As with any other type of brick-and-mortar or Internet-based business, you must keep a good record of your trades and related data for your Forex trading online business. Aside from the accounting requirements of good record-keeping, you can enjoy greater improvement potential in your trading business when you decide to journal and review your executed trades periodically.

The importance of doing so cannot be overemphasized. You should get into the positive habit of writing down the particulars of each of your trades along with your thoughts during the execution process. By doing so, will get the benefit of documenting your thought process during that snapshot in time, which you can later study and improve upon.

This may seem like an unnecessary extra step, but is something that most successful traders will tell you was pivotal in their growth as a forex trader. And so, you should not underestimate the benefits of the journaling process . It is one of the best techniques for evaluating what your strengths and weaknesses are in your trading business, and allow you to address those areas that need improvement.

There are several different ways that you can keep track of your daily trades. One way would be to simply write it down manually on a sheet of paper, and create a folder that aggregates all of these daily journaling sheets together. This is obviously one of the most basic ways to track your trades over time.

A preferred solution would be to make use of a spreadsheet application or specialized journaling software designed specifically for trade journaling. A simple spreadsheet such as Excel or other open source spreadsheet would be sufficient for this purpose.

For those that are more inclined and prefer a deeper data-driven approach, a trading journal software would be recommended. There are several free trade journaling software programs available on the market, and some premium paid products as well that you can research. Any of these methods is better than none. Remember, the more your treat forex as a business rather than a hobby, the better off you will be.

Closing thoughts

Starting a forex trading business has many advantages as we have discussed in this article. At the same time, there are some common pitfalls that you want to avoid when setting up your FX business. You will want to make that you put together a forex trading business plan as early as possible.

It’s often said that trading is simple, but not easy. That is to say that those traits needed to achieve success in the markets are well known, however, as a practical matter it is very difficult to stay focused and disciplined when real money is on the line. As such, it’s imperative that you take time to understand your own strengths and weaknesses, and create a trading strategy that aligns with those personality traits.

And remember, although profitability may come relatively quickly for a small minority of traders, the overwhelming majority of people entering this field will require at least a year or longer before they begin to get a solid footing. So do not get discouraged too early in your trading journey.

Listen UP….

Take Your Trading to the Next Level, Accelerate Your Learning Curve with my Free Forex Training  Program. 

Trading Business Plan Template

Written by Dave Lavinsky

Trading Business Plan

Over the past 20+ years, we have helped over 500 entrepreneurs and business owners create business plans to start and grow their trading companies.

If you’re unfamiliar with creating a trading business plan, you may think creating one will be a time-consuming and frustrating process. For most entrepreneurs it is, but for you, it won’t be since we’re here to help. We have the experience, resources, and knowledge to help you create a great plan.

In this article, you will learn some background information on why business planning is important. Then, you will learn how to write a trading business plan step-by-step so you can create your plan today.

Download our Ultimate Business Plan Template here >

What is a Trading Business Plan?

A business plan provides a snapshot of your trading company as it stands today, and lays out your growth plan for the next five years. It explains your business goals and your strategies for reaching them. It also includes market research to support your plans.

Why You Need a Business Plan for a Trading Company

If you’re looking to start a trading company or grow your existing company, you need a business plan. A business plan will help you raise funding, if needed, and plan out the growth of your trading business to improve your chances of success. Your business plan is a living document that should be updated annually as your company grows and changes.

Sources of Funding for Trading Companies

With regards to funding, the main sources of funding for a trading company are personal savings, credit cards, bank loans, and angel investors. When it comes to bank loans, banks will want to review your plan and gain confidence that you will be able to repay your loan and interest. To acquire this confidence, the loan officer will not only want to ensure that your financials are reasonable, but they will also want to see a professional plan. Such a plan will give them the confidence that you can successfully and professionally operate a business. Personal savings and bank loans are the most common funding paths for trading companies.

Finish Your Business Plan Today!

How to write a business plan for a trading company.

If you want to start a trading business or expand your current one, you need a business plan. The guide below details the necessary information for how to write each essential component of your trading business plan.

Executive Summary

Your executive summary provides an introduction to your trading business plan, but it is normally the last section you write because it provides a summary of each key section of your plan.

The goal of your executive summary is to quickly engage the reader. Explain to them the kind of trading company you are running and the status. For example, are you a startup, do you have a trading business that you would like to grow, or are you operating a chain of trading companies?

Next, provide an overview of each of the subsequent sections of your plan.

• Give a brief overview of the trading industry.
• Discuss the type of trading business you are operating.
• Detail your direct competitors. Give an overview of your target customers.
• Provide a snapshot of your marketing strategy. Identify the key members of your team.
• Offer an overview of your financial plan.

Company Overview

In your company overview, you will detail what type of trading business you are operating.

For example, you might specialize in one of the following types of trading businesses:

• Retail trading business: This type of business sells merchandise directly to consumers.
• Wholesale trading business: This type of business sells merchandise to other businesses.
• General merchandise trading business: This type of business sells a wide variety of products.
• Specialized trading business: This type of business sells one specific type of product.

In addition to explaining the type of trading business you will operate, the company overview needs to provide background on the business.

Include answers to questions such as:

• When and why did you start the business?
• What milestones have you achieved to date? Milestones could include the number of customers served, the number of products sold, and reaching $X amount in revenue, etc.
• Your legal business Are you incorporated as an S-Corp? An LLC? A sole proprietorship? Explain your legal structure here.

Industry Analysis

In your industry or market analysis, you need to provide an overview of the trading industry.

While this may seem unnecessary, it serves multiple purposes.

First, researching the trading industry educates you. It helps you understand the market in which you are operating.

Secondly, market research can improve your marketing strategy, particularly if your analysis identifies market trends.

The third reason is to prove to readers that you are an expert in your industry. By conducting the research and presenting it in your plan, you achieve just that.

The following questions should be answered in the industry analysis section:

• How big is the trading industry (in dollars)?
• Is the market declining or increasing?
• Who are the key competitors in the market?
• Who are the key suppliers in the market?
• What trends are affecting the industry?
• What is the industry’s growth forecast over the next 5 – 10 years?
• What is the relevant market size? That is, how big is the potential target market for your trading business? You can extrapolate such a figure by assessing the size of the market in the entire country and then applying that figure to your local population.

Customer Analysis

The customer analysis section must detail the customers you serve and/or expect to serve.

The following are examples of customer segments: individuals, schools, families, and corporations.

As you can imagine, the customer segment(s) you choose will have a great impact on the type of trading business you operate. Clearly, individuals would respond to different marketing promotions than corporations, for example.

Try to break out your target customers in terms of their demographic and psychographic profiles. With regards to demographics, including a discussion of the ages, genders, locations, and income levels of the potential customers you seek to serve.

Psychographic profiles explain the wants and needs of your target customers. The more you can recognize and define these needs, the better you will do in attracting and retaining your customers.

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Competitive Analysis

Your competitive analysis should identify the indirect and direct competitors your business faces and then focus on the latter.

Direct competitors are other trading businesses.

Indirect competitors are other options that customers have to purchase from that aren’t directly competing with your product or service. This includes other types of retailers or wholesalers, re-sellers, and dropshippers. You need to mention such competition as well.

For each such competitor, provide an overview of their business and document their strengths and weaknesses. Unless you once worked at your competitors’ businesses, it will be impossible to know everything about them. But you should be able to find out key things about them such as

• What types of customers do they serve?
• What type of trading business are they?
• What is their pricing (premium, low, etc.)?
• What are they good at?
• What are their weaknesses?

With regards to the last two questions, think about your answers from the customers’ perspective. And don’t be afraid to ask your competitors’ customers what they like most and least about them.

The final part of your competitive analysis section is to document your areas of competitive advantage. For example:

• Will you make it easier for customers to acquire your product or service?
• Will you offer products or services that your competition doesn’t?
• Will you provide better customer service?
• Will you offer better pricing?

Think about ways you will outperform your competition and document them in this section of your plan.  

Marketing Plan

Traditionally, a marketing plan includes the four P’s: Product, Price, Place, and Promotion. For a trading company, your marketing strategy should include the following:

Product : In the product section, you should reiterate the type of trading company that you documented in your company overview. Then, detail the specific products or services you will be offering. For example, will you sell jewelry, clothing, or household goods?

Price : Document the prices you will offer and how they compare to your competitors. Essentially in the product and price sub-sections of your plan, you are presenting the products and/or services you offer and their prices.

Place : Place refers to the site of your trading company. Document where your company is situated and mention how the site will impact your success. For example, is your trading business located in a busy retail district, a business district, a standalone facility, or purely online? Discuss how your site might be the ideal location for your customers.

Promotions : The final part of your trading marketing plan is where you will document how you will drive potential customers to your location(s). The following are some promotional methods you might consider:

• Advertise in local papers, radio stations and/or magazines
• Reach out to websites
• Distribute flyers
• Engage in email marketing
• Advertise on social media platforms
• Improve the SEO (search engine optimization) on your website for targeted keywords

Operations Plan

While the earlier sections of your plan explained your goals, your operations plan describes how you will meet them. Your operations plan should have two distinct sections as follows.

Everyday short-term processes include all of the tasks involved in running your trading business, including answering calls, scheduling shipments, ordering inventory, and collecting payments, etc.

Long-term goals are the milestones you hope to achieve. These could include the dates when you expect to acquire your Xth customer, or when you hope to reach $X in revenue. It could also be when you expect to expand your trading business to a new city.  

Management Team

To demonstrate your trading business’ potential to succeed, a strong management team is essential. Highlight your key players’ backgrounds, emphasizing those skills and experiences that prove their ability to grow a company.

Ideally, you and/or your team members have direct experience in managing trading businesses. If so, highlight this experience and expertise. But also highlight any experience that you think will help your business succeed.

If your team is lacking, consider assembling an advisory board. An advisory board would include 2 to 8 individuals who would act as mentors to your business. They would help answer questions and provide strategic guidance. If needed, look for advisory board members with experience in managing a trading business.  

Financial Plan

Your financial plan should include your 5-year financial statement broken out both monthly or quarterly for the first year and then annually. Your financial statements include your income statement, balance sheet, and cash flow statements.  

Income Statement

An income statement is more commonly called a Profit and Loss statement or P&L. It shows your revenue and then subtracts your costs to show whether you turned a profit or not.

In developing your income statement, you need to devise assumptions. For example, will you charge per item or per pound and will you offer discounts for bulk orders? And will sales grow by 2% or 10% per year? As you can imagine, your choice of assumptions will greatly impact the financial forecasts for your business. As much as possible, conduct research to try to root your assumptions in reality.  

Balance Sheets

Balance sheets show your assets and liabilities. While balance sheets can include much information, try to simplify them to the key items you need to know about. For instance, if you spend $50,000 on building out your trading business, this will not give you immediate profits. Rather it is an asset that will hopefully help you generate profits for years to come. Likewise, if a lender writes you a check for $50,000, you don’t need to pay it back immediately. Rather, that is a liability you will pay back over time.  

Cash Flow Statement

Your cash flow statement will help determine how much money you need to start or grow your business, and ensure you never run out of money. What most entrepreneurs and traders don’t realize is that you can turn a profit but run out of money and go bankrupt.

When creating your Income Statement and Balance Sheets be sure to include several of the key costs needed in starting or growing a trading business:

• Cost of equipment and supplies
• Payroll or salaries paid to staff
• Business insurance
• Other start-up expenses (if you’re a new business) like legal expenses, permits, computer software, and equipment

Attach your full financial projections in the appendix of your plan along with any supporting documents that make your plan more compelling. For example, you might include your facility location lease or a list of your suppliers.  

Writing a business plan for your trading business is a worthwhile endeavor. If you follow the template above, by the time you are done, you will truly be an expert. You will understand the trading industry, your competition, and your customers. You will develop a marketing strategy and will understand what it takes to launch and grow a successful trading business.

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5 March 2024 - 12min Read

Forex trading plan

When experienced traders discuss trading plans, beginners often get distracted from what is actually important. Isn't it just a matter of "learning a setup" or "executing the setup"? Unfortunately, it is not that straightforward. Forex trading has multiple degrees of complexity, ranging from the most basic (buying and selling) to the most complicated (planned risk management, entries, exits, timeframes, and goals). Experienced Forex traders will know that the consistent application of a combination of these elements is essential for a successful trading career.   This article will work as a blueprint for achieving consistency and success in trading. It will also answer some important questions, such as why it is vital to have a trading plan and how to build a trading plan.

Table of Content

Key takeaways

What is a trading plan, how does a trading plan work, why do you need a trading plan, how to create a trading plan, template to build a forex trading plan, final thoughts, people also asked.

• A trading strategy is a road map for how you execute trades.
• A trading plan should be documented and executed in full. It should only be changed if it no longer works or unless you discover a method to enhance it.
• A basic trading plan comprises guidelines for trade entry and exit, risk management, and position sizing.
• Having a trading plan and then sticking to it is critical for trading success.
• A trading strategy may be reevaluated and updated as market circumstances change.
• A good trading plan suits the trader's psychology and goals.

Marc Aucamp

Content Writer

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A trading plan is a set of guidelines you should follow in order to succeed in your goals. Its foundation is always money management and risk management, and from these come decisions on trade size and entry/exit criteria. A trading strategy will also set rules about how you handle open positions, what instruments you may trade, and various other relevant rules.

A trading plan combines trading principles to form a set of rules you will use in achieving your trading objectives. Assume your primary objective is to avoid major losses. Then, following a string of losses, your trading plan should include a section where you are supposed to stop trading and take a break. In the event of an extended losing period, you should try to identify flaws in your strategy and then modify your trading plan accordingly.

Your trading plan could be simple when making a long-term investment (position trading). However, trend, swing , and day trading require detailed rules that cover numerous aspects of a trading routine. In this case, you can quickly determine if something is wrong so that you can take action and manage the outcome. Even if a trade goes against you, your trading plan should help you minimise your losses.

Some people believe that they don't need a trading plan to succeed. This approach may work for a short time for novice traders. However, a lack of a trading plan can result in substantial losses since a trader will inevitably have difficulties managing emotions during periods of intense market volatility or after a string of wins/losses.

A trading plan is necessary since it can assist you in making rational trading choices and defining your ideal entry and exit criteria. A trading plan benefits you in the following ways:

• Trading is easier since all the preparation has been done beforehand, allowing you to trade according to your pre-set criteria.
• You already know when to close a position (take profits or cut losses), thereby reducing the effect of your emotions on your trading.
• By strictly following your trading plan, you will come to understand why certain trades succeed, and others don't.
• Keeping a track record of your trades in your trade plan will help you to learn from previous mistakes and enhance your skills.

The markets are moving.

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Staying focused on your trading goals will be much simpler if you have a trading plan in place. Your trading plan will tell you what to do so that you can stay disciplined while limiting your losses.

Here are some crucial aspects that you have to consider when drawing up your trading plan:

Evaluate yourself

Before creating your plan, you should honestly assess your market experience, your objectives, and weaknesses. For example, complex trading strategies may not be the best place to start if you're a complete beginner. It's also a good idea to establish the financial instruments with which you're most comfortable and to start by focusing on one or two markets. Whatever your ultimate aim is, be sure your strategy is designed with your motivation in mind. Consider where you want to be in 10 years and make ten yearly goals to get there. You'll want your trading plan to capitalise on your strengths over the long term.

As you develop, you'll learn more about your strengths and shortcomings, so review and revise your strategy on a regular basis.

Determine your trading style

You should be able to determine which trading style suits you best. Trend or swing trading may fit you well if you're looking for long-term results and don't want to spend too much time in front of a computer screen. Alternatively, you might explore day trading if you want to trade full-time without having the risk of running your trades overnight.

Pay attention to market hours.

Although the forex market is open 24 hours a day , five days a week, currency pairs may only be liquid during certain hours. Volume increases when the London and European markets open because large financial institutions start trading. Trading volumes also rise after the New York session begins.

There is a gap between the close of the New York markets and the start of the Sydney session. This is typically when trading volume falls and spreads widen. When the forex markets lack direction, you may be vulnerable to trading noise and confusion. If your strategy isn't working, it might be because you're trading at the wrong time of day.

You can learn more about forex market opening hours here.

Forex markets can be fast-paced.  Consequently, stops and limits should be used to help you manage your trading. Stops  work as safeguards to protect you from significant losses. While limits can help you take profits on sudden favourable moves. The distance between your opening level and stop loss, multiplied by the size of your trade, should equal the percent amount in your trading capital you are willing to risk per trade. 

Forex pairs

You can choose from forex majors, minors, and exotics. Forex majors have the most liquidity and narrowest spreads, whereas minors and exotics can often have less liquidity and larger spreads. But again, consider market hours particularly if looking to trade exotic pairs. Developing trading strategies based on the majors means you can focus on a few pairs. But you may well find profitable opportunities outside of the majors. So make sure that you plan your trades according to your strategy, and you can always check historical data to help identify forex pairs with the most trading opportunities.

You can learn more about the best forex pairs to trade here.

Risk to reward ratio

Determine what your risk-to-reward ratio will be on each trade. Will it be a constant, or may it vary for different conditions? If the latter,  then what conditions? Typically any risk-to-reward ratio equal to or above 1:1 can be profitable as long as your strategy has a good strike rate. However, the higher your risk-to-reward ratio, the better.

Psychological aspect

How is your emotional well-being? What are your thoughts? Have you had enough sleep? How is your relationship going? Do you say or do things out of poor emotional impulse control? How is your emotional intelligence? How do you deal with taking a loss? Do you believe you're up to the task ahead? Being self-aware is very important for making the right trading decisions because it will help you avoid mistakes like revenge trading, that is desperately trading to make back a loss.  

Take the day off if you are not emotionally and mentally prepared to compete in the market. You’re more likely to suffer  losses because of poor trading decisions if you are angry, busy, or otherwise distracted for some reason. Furthermore, your trade space should be clear of distractions. Remember that trading in forex as a career is like performing any other skill, and distractions can cost you money and peace of mind.

Money Management

Establish how much money you are prepared to risk in total. Remember, this is margin trading which employs leverage. As a consequence, it is very high risk. Trading is speculation, not investing. So, your risk capital must be money you can afford to lose if everything goes wrong. It’s not your savings or holiday money. Once you’ve established this, split it up into discrete bundles. Some traders will never risk more than 1% of their risk capital per trade; others may go up to 5% or more. But the smaller the percentage, the more trades you can make. Although if you don’t have much risk capital, 1% may not be enough to trade every market, once you take risk management into account.

Trading journal

Most successful traders have one thing in common: they keep a trading journal that records all their trading activities. Whether they win or lose, they want to know why and how. Your trading journal will cover details such as goals, entries and exits, expectations, fundamental and technical aspects, timing, and remarks about how it turned out and how you feel.

You should also be prepared to regularly go back and analyse the profit or loss, drawdowns, average time per trade, and other critical elements of the trades. Journaling will help you evolve over time and sharpen your skill. 

Here's what you will need to build a good trading plan:

Understanding how markets operate means learning market structure and market dynamics, being aware of macroeconomic news events, and analysing their outcomes. Find and better understand your edge. In addition, you will have to accept the pros and cons of your trading edge. Accept that you may  experience losses early in your trading career. Don't expect to win every trade; choose nearly perfect trade setups according to your edge and let them work for you.

Understand the concept of probability, which means your edge is likely to be successful a certain number of times. For example, you may find a setup with a 70% winning probability over the past 20 years of historical data. There’s no guarantee that the 70% probability will work going forward. But you may consider working with that setup as long as you also incorporate strict risk management.

Always have a backup plan if your trading plan stops working. Find the flaw in your strategy and try to cope with it. In some cases, you will have to find an entirely new edge. Just don't lose hope, and keep going.

You must work to understand the ideal market environment for your trading plan. In other words, work out the best scenario for your strategy. 

Find setups that have good risk-to-reward ratios. Define your risk per trade. As discussed above, this could be no more than 1% of your total risk capital on each trade. Remember: this is the difference in points between your opening level and your stop loss, multiplied by your trade size. 

You can also create a  risk deployment strategy. For example, if you have a substantial amount of risk capital, you don't have to put all the money in one position; you may scale up and add positions as the price goes in your favour. Another technique that swing traders use is putting limit orders to catch corrections or short-term pull back to get a better entry.

Then you need to set criteria for trade management. It will cover the how and why of your entries and exits. Are there predefined goals? Volatility goals? What about trailing stops?  Should you close a position if something doesn't feel right? How will you address your gut feeling? The goal here is to run your winners while cutting your losers as quickly as possible. Your trading plan can help with all this. 

Consider your fundamental ideas about the market, yourself, and how the world works.  Do you execute trades based on what you feel or see and understand? Is that consideration based on your trading signals or your emotions?  Instead, it can help to be mechanical when thinking about trading and when forming your trading plan. 

It is common knowledge that excellent physical health leads to greater mental health and vice versa. It is usually advised to avoid trading if you are not in good physical condition. Mindfulness is a byproduct of good physical health. Taking on too much risk will have negative consequences for your health, mental and physical. Make sure you always have stops in place so that fears of an adverse market movement don’t keep you awake at night. 

Try to maintain strict discipline in your trading and only take action when there is a reason. The objective is not to find the Holy Grail that will reveal the secrets of markets because there isn’t one.  Instead, try  to find a trading method that matches your personality and can help you make money in the future. 

You must know yourself and not pretend to be someone you are not.

Getting good results in demo trading does not ensure success when trading with real money. It’s during the latter that emotions enter the picture. However,  demo trading can help you find an edge by back-testing or forward-testing. You can use what you learn on a demo account to help you create your trading plan.  There is no way to ensure that every trade you make will be profitable. But careful risk and money management will boost the longevity of your trading career, and that in turn can help boost your chances of success. 

Why is having a trading plan important?

A trading plan instils discipline and helps you control your emotions. 

What should a trading plan include?

A premarket and postmarket routine which involves a study of trading conditions and consideration of    risk management. Stop Loss, and Take Profit levels must be included in a trading strategy.

Are trading systems and trading plans two different things?

A trading system outlines the trading strategy of how you want to enter and exit trades. A trading plan will tell you how and when you will execute your trades with defined criteria such as analysis, executions, risk management, and so on.

What is the trading golden rule?

If you are persistent, learn from your errors, and use risk management, you can expect to be successful in trading.

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• What is a Forex Trading Strategy
• Basics of a Trading Strategy
• Creating a Forex Strategy
• Time to Change Strategies

The Bottom Line

• Guide to Forex Trading
• Strategy & Education

How to Create and Manage an Effective Forex Trading Strategy

Adam Hayes, Ph.D., CFA, is a financial writer with 15+ years Wall Street experience as a derivatives trader. Besides his extensive derivative trading expertise, Adam is an expert in economics and behavioral finance. Adam received his master's in economics from The New School for Social Research and his Ph.D. from the University of Wisconsin-Madison in sociology. He is a CFA charterholder as well as holding FINRA Series 7, 55 & 63 licenses. He currently researches and teaches economic sociology and the social studies of finance at the Hebrew University in Jerusalem.

Gordon Scott has been an active investor and technical analyst or 20+ years. He is a Chartered Market Technician (CMT).

• Forex (FX): How Trading in the Foreign Exchange Market Works
• Forex Trading: A Beginner's Guide
• Getting Started in Forex
• Basics Of Currency Trading
• Currency Pairs
• Interest Rates
• Central Banks
• Leveraged Trading
• Forex Trading Account
• Spot Currencies
• Currency Forwards
• Currency Futures
• Currency Swaps
• 7 Currencies Worth More Than the U.S. Dollar
• Forex Trading Strategy CURRENT ARTICLE
• 9 Forex Trading Tips
• Strategies for Part-Time Forex Traders
• 3 Simple Strategies For Euro Traders
• Currency Carry Trades
• Interest Rate Parity
• Harmonic Patterns in FX
• Forex Algorithmic Trading

What Is a Forex Trading Strategy?

A forex trading strategy is a technique used to determine whether to buy or sell a currency pair at a certain time. Forex trading strategies can be based on technical analysis  or fundamental, news-based events. A trader’s strategy is usually made up of trading signals that trigger buy or sell decisions.

Forex trading strategies are available on the Internet or they may be developed by traders themselves.

Key Takeaways

• The forex market is the largest market in the world with a daily volume of around $6 billion U.S. dollars in November 2023.
• Forex trading strategies involve the use of specific techniques to generate profits from the purchase and sale of currency pairs in the forex market.
• Manual or automated tools are used to generate trading signals in forex trading strategies.
• Traders working on their own trading systems should backtest their strategies first before committing capital. Paper-trade them first to ensure they perform well.

Basics of a Forex Trading Strategy

Forex trading strategies can be either manual or automated methods for generating trading signals. Manual systems involve a trader sitting in front of a computer screen, looking for trading signals and interpreting whether to buy or sell. Automated systems involve a trader developing an algorithm that finds trading signals and executes trades on its own. The latter systems take human emotion out of the equation and may improve performance.

Traders should exercise caution when purchasing off-the-shelf forex trading strategies because it's difficult to verify their track record and many successful trading systems are kept secret.

One way to learn to trade forex is to open a demo account and try it out.

Creating a Forex Trading Strategy

Many forex traders begin with a simple trading strategy . They might notice that a specific currency pair tends to rebound from a particular support or resistance level. They might then decide to add other elements that improve the accuracy of these trading signals over time. They might require that the price rebound from a specific support level by a certain percentage or a number of pips .

An effective forex trading strategy requires several components:

• Selecting the market : Traders must determine what currency pairs they want to trade and become experts at reading them.
• Position sizing : Traders must determine how large each position is to control for the amount of risk taken in each individual trade.
• Entry points : Traders must develop rules governing when to enter a long or short position in a given currency pair.
• Exit points : Traders must develop rules telling them when to exit a long or short position, as well as when to get out of a losing position.
• Trading tactics : Traders should have set rules for how to buy and sell currency pairs, including selecting the right execution technologies.

You can see if your broker offers high leverage through a margin account if you have limited capital. Any broker with a wide variety of leverage options should do so if capital isn't a problem. A variety of options let you vary the amount of risk you're willing to take. Less leverage and thus less risk may be preferable for some individuals.

When Is It Time to Change Strategies?

A forex trading strategy works very well when traders follow the rules but one particular strategy may not always be a one-size-fits-all approach. What works today may not necessarily work tomorrow. Traders might consider a few options before changing a game plan if a strategy isn't proving to be profitable and if it isn't producing the desired results:

• Match risk management with trading style : It may be time to change strategies if the risk vs. reward ratio isn't suitable.
• Market conditions evolve : A trading strategy may depend on specific market  trends so a particular strategy may become obsolete if these change. This could signal a need to make tweaks or modifications.
• Comprehension : There's a good chance that a strategy won't work if the trader doesn't quite understand it. The effectiveness of the strategy is lost if a problem comes up or a trader doesn't know the rules.

Change can be good but changing a forex trading strategy too often can be costly. You could lose out if you modify your strategy too often.

Example of a Basic Forex Trading Strategy

Most successful forex traders develop a strategy and perfect it over time. Some focus on one particular study or calculation. Others use broad-spectrum analysis to determine their trades. One simple strategy is based on relative interest rate changes between two countries.

Imagine a trader who expects interest rates to rise in the U.S. compared to Australia when the exchange rate between the two currencies ( AUD/USD ) is 0.67. It would take $0.67 USD to buy $1.00 AUD.

The trader believes higher interest rates in the U.S. will increase demand for USD and the AUD/USD exchange rate will then fall because it will require fewer, stronger USD to buy an AUD. Assume that the trader is correct and interest rates rise. This decreases the AUD/USD exchange rate to 0.50. It would now require $0.50 USD to buy $1.00 AUD. The investor would have profited from the change in value if they had shorted the AUD and had gone  long  on the USD.

Where Can I Trade Currencies on the Forex Market?

There are many online forex brokers to choose from, just as in any other market. Look for platforms that feature low fees and tight spreads. Make sure your broker is covered by a regulatory body and has a solid reputation. A platform with charting tools and algorithmic trading is also a plus for more advanced traders.

What Is a "Pip" in Forex?

Pip is an acronym for "percentage in point" or "price interest point." A pip is the smallest price move that an exchange rate can make based on forex market convention. Most currency pairs are priced out to four decimal places and the pip change is the last (fourth) decimal point. A pip is thus equivalent to 1/100 of 1% or one  basis point .

What Is a Carry Trade in Forex?

A currency carry trade is a popular strategy that involves borrowing from a low-interest rate currency to fund purchasing a currency that provides a higher rate of interest. A trader using the carry trade attempts to capture the difference between the two interest rates. This can be substantial depending on the amount of leverage used.

What Is Trade Size in Forex?

There are several standard trading or lot sizes for forex accounts depending on your amount of capital and your level of expertise. Standard  forex accounts require order lots of 100,000  base units and mini accounts are standardized at 10% of that or 10,000 lot trades. The even smaller micro accounts allow 1,000 base unit trades and nano accounts allow just 100 although nano accounts aren't always available.

Standard accounts must enter orders in multiples of 100,000. Mini account holders place trades in multiples of 10,000.

There's no free money in forex trading but the simplest strategy from a mechanics perspective is simply speculating that one currency will rise or fall in value relative to another. Of course, you could lose money if you wrongly gauge the direction of the bet. Consider using programs like MetaTrader that make it easy to automate rule-following. These applications let traders backtest trading strategies to see how they would have performed in the past.

Statista. " Daily Turnover of Global Foreign Exchange Market With 39 Different Currencies From 2001 to 2022 ."

FOREX.com. " AUD/USD ."

IBKR Campus. " Traders' Glossary/PIP ."

John Hancock Investment Management. " What Is a Carry Trade? "

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Creating a Forex Trading Plan Template: A Step-by-Step Guide

• Post author By Forex Academy
• Post date 26 July, 2023
• No Comments on Creating a Forex Trading Plan Template: A Step-by-Step Guide

Creating a Forex Trading Plan Template: A Step-by-Step GuideForex trading is a highly dynamic and fast-paced market. In order to navigate through the ups and downs of this market, it is crucial to have a well-defined trading plan. A trading plan acts as a roadmap that guides traders in making informed decisions and helps them…

Step 1: Set Clear Goals and Objectives

Step 2: Determine Your Trading Style

Choose a trading style that best suits your personality, time availability, and risk tolerance., step 3: define risk management strategies, step 4: develop trading strategies, step 5: create a trading journal, step 6: review and update your plan.

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How to develop a trading plan

“Many people think that trading can be reduced to a few rules. Always do this or always do that. To me, trading isn’t about always at all; it is about each situation.” – Bill Lipschitz, Market Wizard.

As the age-old adage goes, if you fail to plan, then plan to fail. Trading is a risky business.

“Risky” means that, like other endeavours in life, you need to plan ahead in order to manage the inherent uncertainty of the markets, and make sure that your risk capital (which, after all, is what allows you to stay in the game) is never depleted. Notional funding, proper position sizing, and discipline are key to this part of the equation.

“Business” means that you are to treat this endeavour as a business and not as a gamble. If you had a business plan to show Warren Buffett, would he approve and invest in you? Buffett invests in businesses that will be around for the next 100 years—or at least for the foreseeable future. Businesses that are strong, with a clear strategy, with a competitive moat. You need to structure your trading business in the same way.

Developing a clear edge (your moat), sitting on your hands until your edge is in play (patience), diversifying your bets without diworsifying them, and managing correlations are key to this part of the equation. But also being in a personal position to make trading work for you. Don’t think about paying the bills with your trading. Rather, make sure you have diversified income streams that allow you to learn, survive, and then thrive, without being pressured to perform.

You need a clear and concise plan to guide you along your path to consistent trading, as your plan becomes the foundation for rational decision-making, instead of reckless emotion-driven mistake-making. But not any old plan will do. It needs to be unique and special to you. It needs to be your plan—one you own deep down.

A Trading Plan Template

When experienced traders talk about trading plans, aspiring traders usually start to yawn and get distracted. After all, isn’t it only about “learning a setup” and “executing the setup”? Unfortunately, it isn’t that simple at all. Actual setups are only the tip of the iceberg. A real trading plan is much more like a well-prepared game of chess. You need strategy (the goals and the objectives), tactics (how to achieve the goals), and psychology (stress management). Here is a blueprint for a solid trading plan:

• Secure multiple income streams (i.e. get a part time job or remain on your day job while you learn and perfect your method; make sure your risk capital is capital you can afford to lose without changing your lifestyle).
• Understand how the markets work. (Learn about market structure, market dynamics, macroeconomic news events, and their implications).
• Understand your edge (and there are many edges to be exploited; so long as you find a set of conditions that are based on actual participation, you will be just fine).
• Accept uncertainty. (You will have losses, especially early on in your trading career, so plan for them, and don’t try to win every trade; try instead to select quality trades and let them work for you).
• Understand probabilities. (Anything can happen in the short term; your edge will reveal itself in the medium term as the distribution of wins/losses is rather random).
• Contingency planning. (Always have a plan B; if you cannot make your trading work within a determined time horizon—for example, one year—then seek coaching or help if you want to pursue this business; do not throw good capital after bad).
• Understand when your edge is in play, and keep tabs on it. (How many trades per week do you have? How many per month? This way, you can plan your month in advance).
• What is your system’s aim? (Examples might be to maximize short-term gains within a momentum move; to scale into potential long term trends as they develop; to fade range extremes; etc.)
• Define the appropriate market environment. (What constitutes a trend? What constitutes a range? Where are the transition points? Which situation is ideal for my strategy?)
• Define a low-risk setup. (Breakouts or pullbacks are classic examples of ideal setups in a trend environment.)
• Define your risk per trade. (Usually, it’s best to not risk anymore than 1% of consolidated equity per trade, and that 1% should be “fit” to the amount of pips from entry to stop loss, so that larger positions are possible when stops are tighter and vice versa).
• Define how to deploy your risk. (You don’t have to enter with a full stake; you can scale-in as the price moves in your favour; you can enter a portion at market and leave a limit order to catch a retracement, etc.)
• Define your trade management criteria. (When to hold, when to fold? When to scale out or add? The objective here is to ride winners and cut losers as soon as logically possible. Unfortunately, there is no magic formula for this, and you will need to experiment.)
• Define your exit criteria. (Pre-defined targets? Volatility targets? Trailing stops? Once again, there is no magic formula and you will need to explore what works best with your method.)
• Performance monitoring. (Keep detailed statistics on your trades, especially in the beginning. Beyond the cold hard maths, keep tabs also on the approach and setups you use, because if you have a record of 50 trades, but you’ve done something different in each one of them, in reality you don’t have a statistically valid track record, because you’re using a repetitive process.)
• System improvement. (Based on your performance monitoring, you will be able to identify key areas to work on and key areas that are working well. For example, if you win frequently, but your winning trades are small compared to your losing trades, you might consider keeping tighter stop losses or finding ways to let your winners run further.)
• What are your core beliefs (about the market, about yourself, about how the world works)?
• Do your core beliefs match those of the top market participants? (Since we tend to trade based on what we believe to be right, we need to be in tune with the markets, and reading through Market Wizards might prove to be a better exercise than reading through ZeroHedge, for example.)
• Do you have performance anxiety? (Are you afraid to lose? Are you under pressure to win? Do you feel like trading is your last hope? Any mental blocks that you have, whether you are aware of them or not, will emerge when you start to risk your capital in the markets. Be prepared to accept your mental issues and perhaps seek professional help to work through them—but do not avoid them, because it will block your performance.)
• Are you in good shape? (It’s no secret that good physical health leads to better mental health and vice versa. Avoid trading when you’re not in peak shape.)
• Work on yourself. (Mindfulness is a great practice to adopt.)
• Have iron discipline in your trading plan.
• Be grateful. (This tends to promote relaxation and appreciation, and also keeps greed away.)

The quest is not finding the Holy Grail that unlocks the secrets to market success, but rather finding an approach that fits your personality. That is the reason you need to have clear answers to all the questions above. You cannot succeed in the markets by copying someone else’s approach, because the odds are remote that their method will fit your personality. You have to know yourself, and not try to be somebody you’re not.

The Power of a Side Income

“I’m extremely well diversified. My thought process is if I screw up in one place, I’ll always have a life preserver someplace else.” – Marty Schwartz, Market Wizard.

Much of trading effectively is about stress management. A highly stressed trader makes mistakes, and has trouble trading his plan. And stress comes from many places, so it is imperative that you stabilize your personal situation first, and then attempt to tame the markets!

Here are the main perils of trading under pressure:

• Lack of discipline.
• Looking for trades as opposed to waiting for setups to appear.
• Impossibility to treat losses like the cost of doing business and nothing more.
• Overtrading.
• Cutting winners short.
• Riding losses.

Like any endeavour in life, you need to be fully committed. For limiting mental pressure in trading, this means that it does not matter what you do, even if it involves stacking shelves part-time. It’s just important to make sure you have another source of income if you want to be a trader. Cashflow is king, as it helps you manage stress.

Build your Trading Plan

With all this said and done, it is time to get our hands dirty and build a trading system from the ground up. If you view your trading plan as an expensive sports car, aimed at taking you from point A (aspiring trader) to point B (consistent successful trader), then evidently the core component of your trading plan— the “motor”, so to speak—is the actual trading system. The psychological aspect can be seen as “how you drive the car”. It is very possible to trade a successful system poorly. That’s why you also need the psychological components to make it work.

System Overview

• What is the system’s concept? Remember that simplicity trumps complexity, in trading. So keep your system’s concept simple, for example, “it is aimed at capturing a good trend”.
• What is the system’s objective? If the “background” to the system is a trending environment, then where does your edge appear, within a trend? Does it catch deep pullbacks? Does it play shallow breakouts? When is your edge “in play”?
• Why should the system work as planned? What components of market structure and market dynamics make logical sense if approached this way?
• What is the system’s edge, clearly stated?
• What markets will you trade with the system and why are these markets ideal? à For example, it is well documented how Forex & Commodities tend to trend more than stocks and may be a better choice for a trend system.
• Is the system mechanical or discretionary? Usually, having clear rules to abide by will assist in making rational decisions.
• Is the system purely technical or does it include outside information? à Outside information can be, for example, sentiment indicators, macroeconomic news, etc.)
• What time frames does the system work with? Is it a multi-time frame approach? Or does it work off one single time frame?
• How often does the system need to be monitored? Intraday? Once per day? Else?
• Potential Problems? When does the system NOT work? What situations are most difficult to assess?

Once you have the system overview completed, it might be a good idea to start demo-trading the system, so you can gradually take note and keep records on the performance and the average number of trades per day/week/month, and take note of the potential problem areas. Remember, attempt to be systematic in your decision-making process. Attempt to identify the same kind of situation time after time. That is the only way to really investigate the odds of your system, and generate meaningful statistics.

Trading Plan Example

Tools: 5-week simple moving average, 5-day simple moving average, 5-day RSI, market wraps/fundamental influences. What is the system’s concept? Trade a trending market; stay away from retracements. What is the system’s objective? Trade in line with an established trend, when momentum is aligned with the trend. Why should the system work as planned? When there are clear drivers pushing prices in a certain direction, it makes it easier to filter trends that should carry on for some length of time. Furthermore, we are adopting a multiple time frame approach and thus obtaining a wider-view of the landscape (avoiding short-sightedness). We are also letting the market deal us in and out of our trades, and thus not forcing anything on it. What is the system’s edge, clearly stated? Identify trend days within trending markets and avoid choppy markets.

What markets will you trade with the system and why are these markets ideal? Forex, Gold, Silver, and Crude Oil are ideal, because they are markets that tend to trend. Is the system mechanical or discretionary? The system is 80% mechanical and 20% discretionary. The trading rules are mechanical; the instrument selection is discretionary. Is the system purely technical or does it include outside information? Combination. What time frames does the system work with? Multi time frame approach (weekly, daily). How often does the system need to be monitored? Once or twice per day. Potential problems? Lack of discipline (attempting to trade in choppy markets); lack of evident drivers; lack of volatility.

"Weekly EURUSD Closing below 5SMA (1st rule confirmed)\u2014Pepperstone MT4."

"Daily EURUSD. So long as we remain below the 5SMA (2nd condition), now that the weekly is negative, and the RSI remains below 50 (3rd condition), we can look for entries."

"EURUSD 1H Chart illustrating the trigger. The price needs to fulfil the prior three requirements, and also needs to break the prior day\u2019s range to the correct side."

Stop Loss is placed at the high of the trigger day.

Exit condition. If a trade has been triggered, then exit the trade on the first occurrence of a neutral or counter-trend day. Usually, the candle-form of a neutral or counter-trend day takes the form of either a Shooting Star, a Hammer, or a Doji.

Probability enhancement. Attempt to take the first valid signal after a daily pullback within the broader (weekly) trend, or attempt to take the first valid signal after a weekly trend change.

Brief Idea on a Counter-Trend System

"Crude Oil, Daily Chart\u2014Pepperstone MT4."

The above example illustrates what could be a very specific system that is aimed at identifying potential reversals from prior month extremes. This means being very specific about the location of the reversal (prior month high or low) and the form of the reversal (particular candle action).

Being so specific will allow you to understand what constituted a high probability play, based on your rules. It should be there, staring you in the face when you turn on your charting software, and there should be no doubt that it is a valid setup.

Once you have established clear parameters for your system, you can start to record:

• Risk/reward ratio.
• Win/loss ratio.
• Max consecutive losses.
• Max consecutive wins.
• Most accurate currency pair (what you tend to get right).
• Least accurate currency pair (what you tend to get wrong).
• Time of entry.
• Trade duration.

This will allow you to generate an expectancy for your system, and hence structure adequate return objectives. But by doing this exercise, you will also understand, with very little margin of error:

• What time your trades usually appear.
• What a “good” setup looks like (confidence).
• What a “poor” setup looks like.
• Whether you have a trade or not.

Much of this process is about understanding when to stay flat. Too many aspiring traders (and also some experienced traders) are not clear on what constitutes a high-odds situation and what is not. By going through the same motions time after time, you can train your instincts if you are disciplined, and allow your “gut” to be in sync with your mind. Here is an example routine through which you can practice: Before going to bed: Read a market wrap for the day, and prepare a likely watchlist of the best looking two to three currency pairs that are likely to offer setups the next day. For our trending system, this could require filtering the most evident markets based on their respective fundamental picture. Then, you could also filter the best looking trends and place pending orders on the highest quality situations.

Before work: Read up on developments during the overnight session. Is there any important news to take into consideration? Is there any evident theme in play? Is the watchlist still valid? Have any orders been executed? At work: If possible, monitor developments around main market openings and manage open trades accordingly. So, depending on your timezone, make sure you catch a glimpse of the European Open, the New York Open, and the Wellington Open. How is price behaving at these key junctures? Does your trade need to be managed? Is everything proceeding well? Was there any unexpected news? After work: Monitor and manage open trades as above, read up on the daily macroeconomic developments, prepare a likely watchlist for the day ahead (if there are any changes to be made on your current watchlist).

Over to You

The final objective of your trading plan is to obtain a comfortable personal situation from which to trade with, with as little pressure as possible. Remember that 12-18 months’ exposure to the markets is not generally enough to become consistent. Becoming a consistent trader is more like a marathon, rather than a sprint. Once your personal situation is in order, focus on building repetitive habits that allow you to confront the markets in the same way, from the same angle, each day. This will allow you to obtain meaningful statistics that can tell you what needs improving and what is working well. But most importantly, by following a structured plan, you will become a specialist of your method. And that is possibly the most powerful attribute a trader can possess.

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The information provided here has been produced by a third party and does not reflect the opinion of Pepperstone. Pepperstone has reproduced the information without alteration or verification and does not represent that this material is accurate, current, or complete and therefore should not be relied upon as such. The Information is not to be considered as a recommendation; or an offer to buy or sell; or the solicitation of an offer to buy or sell any security, financial product, or instrument; or to participate in any particular trading strategy. We advise any readers of this content to seek their own advice. Reproduction or redistribution of this information is not permitted.