Below is an exercise which you can follow to test yourself. It will also make you aware of how difficult it really is to follow a trading plan.
Choose a trading strategy.
(example: New York Breakout Strategy)
Write down every step of the strategy:
- trade the EURUSD pair on the H1 (one hour chart);
- trade 0.01 lots;
- draw horizontal lines at the highest and lowest points of the candles of the last three hours of the previous (London) session;
- enter a Buy order 5 pips + spread (about 7 pips) above the upper line;
- enter a Sell order 5 pips + spread (about 7 pips) below the lower line;
- only enter a trade if the distance between the two lines are less than 50 pips;
- enter the stop-loss (SL) 25 pips from entry or at the opposite line (whichever is the largest);
- profit target (TP): same pips as SL (25)
- Do not trade if resistance levels are within 25 pips of SL or TP;
- If one order triggers, cancel the other order.
- Do 20 trades regardless of the outcome of any individual trades.
- Use a checklist and check off every step of the strategy.
- If you deviate from the strategy by not ticking any one of the requirements or changing any requirement, do not count that trade, whether it is successful or unsuccessful.
- After 20 trades, calculate your success percentage and pip loss or win. Don’t count money, it will increase if you are consistently so successful that you can start increasing your lot sizes.
You have now traded forex with less than $100.
This is an example and the aim is not to make money, but to teach you to keep to your trading strategy. Most probably you will deviate from it and will have to start again.
If you can not keep to the strategy, it means you are not ready to trade seriously. In that case, don’t trade, because you will become the amateur which the professionals take money from.
Once you can do this successfully, you can try out different strategies.