Experience is the one factor that separates a beginner from an expert. With experience comes learning and unlearning. In foreign exchange or forex trading, a massive amount of money can be lost in a blink of an eye. Beginners are not yet experts – hence, forex trading for beginners training from the very beginning for this industry must be solid. Currency can have sudden and drastic movements. Despite coming fully-prepared, sometimes, your plan A is simply not enough. Having a solid plan B is where it counts.
A nod on details
Your parameter for switching to plan B must be specific and measurable. For example, if you cannot predict the movement of the currency because of a sudden global pandemic or political uprising, then making your targets specific can help you with a decision. For example, the amount you are trading with has dipped past the level you are comfortable with, but you still feel positive that it may somehow recover. This strategy was your Plan A. However, it did not show any sign of recovery.
A sound contingency plan involves a risk mitigation strategy. You must label a risk mitigation level where you have to set up an automatic buy or sell when it reaches a specific amount.
A realistic back-up plan
Forex trading for beginners will provide you with what you should continuously learn. In some programs, forex trading training will provide a trading account from which you can practice. With your knowledge of the basics plus what you can learn further from current events and macroeconomic trends, you will be aware of what constitutes an achievable target. It will also depend on your level of conservativeness. These two questions must go in tandem. The first question, on the one hand, is up to how much are you planning to earn? On the other hand, the second question is up to how much are you willing to risk?
All that has happened is a part of reality. Faced with heaps of profit or mounds of losses, sometimes reality sinks in once the action is done. Creating a plan B will, at most, only alleviate the negative effects.
A second glance at what is in control
Sometimes, having milestones from which your actions must be done may keep the situation from spiraling out of control. It is more costly to repair a situation than to prevent it. Sticking to your milestones when you trade foreign exchange is not only a sound risk mitigation strategy but, if extensively studied, may also give you the maximum returns possible. Control does not mean that you have to be rigid in all details. Take note that the forex movement depends on many factors, all of which intersect each other.
Your back-up plan is your safety net. Take note that this plan B is a contingency plan when your best idea is failing or has failed. When you fail Plan A, you have lost valuable resources. Your plan B is your second-best idea. As with your Plan A, this plan B must be analyzed on an equal footing as your original plan. Further, it must be acted upon in a structured manner as much/as possible. Despite a less favorable result, you should stick to your plan B or risk falling to the abyss.