Forex world is full of expert brokers from which most claim that they have best knowledge about forex money management plans. They will also tell that to survive here, mm plans are very important. They will actually try to make your mind towards these plans, but unfortunately few will tell you the actual story. In this article, you will find a real story behind mm plans through my years of experience.
With my years of experience in this field, I am going to show you how you should write a proper mm plan. This isn’t difficult if you just know a few things which I am going to explain now. To get started, we will take funds of $10,000 and the pair which we will use in our example will be in USD/GBP. We will trade in lots of 100:1, and this means that the worth of a single lot is $100.
We are all set to get started and below are the step by step explanation of our working mechanisms:
1. Write the details of your account:
The first step is very simple in which you are going to write about your account like its size and type. For example, I am trading with an account balance of $800. Hence, I will be making almost $100 on every trade with a pip of $1.
2. Explain about your overall maximum target:
You will have to write in detail about the maximum target you want to achieve with the pips. This will define how and where you will stop while going towards your target.
3. Define your goals:
In this section, you will have to write all what you want to get from this account. Let’s say, you want to make earnings of $10k to $20k, you will have to explain like this:
“Under a year of trading, I have set my goal for my account to reach $10k-$20k. In my observation, I would love to have this goal in hand within six months, but I am expecting it will take at least 9-10 months to complete.”
4. Explain your own working mechanisms:
This is indeed one of the most significant parts of mm plan in which you will explain all your working mechanisms. There are several rules through which a trader works, and you will have to write about your rules.
5. Write about the maximum % of risk involved:
Today, no business is free of any risk percentage. In fact, the more there is a risk the better there are chances that you will make more money. Here, you will have to write about your maximum risk which you think you will bear for each trade. Risk up to 5% is quite acceptable for a normal trade.
After writing all those things, create a PDF copy of your mm plan. This will be useful for sharing purpose. Furthermore, you may need to see it in the future so it is must that you save it in a proper format.