You need a trading plan for your trading competition account! A trading plan is crucial if you want to be a successful forex trader. This plan should include what your risk management is, your entry and exit strategies as well as your overall strategy. In short, your trading plan is made for you. But a funded trading account is not you. What does this mean? You need to adjust your plan!
Why do you need a trading plan for your trading competition account?
When you are trading with your personal account nothing will actually stop you from trading. You won’t be locked out of your account if you risk more than what you set out in your trading plan. You don’t need to take a certain amount of trades within a certain timeframe. The only thing that will stop you from trading is you blowing your entire account.
With a funded account there are hard rules. Not only will you have to watch out for an overall drawdown limit, but you’ll also have a daily drawdown limit! If your current trading plan says you can risk 6% of your capital at once, but the funded trading account has a daily drawdown of 2% then your plan will not work.
How do I adjust my plan?
Start with copying your existing trading plan into an easily edited format. If you have it written down in a notebook, convert it onto google docs or Microsoft word.
Adjust your risk management with the funded trading account rules
The easiest place to start is with risk management. Due to drawdown limits, you will have to change your max risk per trade / per day to what that limit is. Note: remember that your account will be closed if you hit this limit. That means you should be aiming to not hit that %! Tip: set your max risk to 0.5% below the limit to give yourself a buffer. Check how much capital you will have in your funded trading account and do some quick % calculations. It will make it easier to know how much you can risk per trade.
Write down the rules for taking profit
If you want to take out some profits from your trading competition account you will have to go through a short process. Some programs will have limitations such as minimum withdrawal amounts, only being able to withdraw once a month, etc. It is important to know when and how much you can withdraw! So, write this down in your trading plan. Some programs also change your drawdown limit or the profit split depending on how much profit you’ve made. It can be handy to note this down here so you can keep track of your profit %.
Spreads
As a forex trader you know spreads are important. Different brokers will have different spreads. This could impact your entry and exit rules. Due to the spreads, you might have to change the RR you go for or maybe you simply don’t want to trade a pair because the spread is too high! This is something you should put down in your plan.
When to take a break from your trading competition account
If you’ve never traded anyone else’s money before then having a trading competition account could turn out to be quite stressful. With your personal account, you might be fine after a losing streak of 4. But now that it’s someone else’s money? All of a sudden you start getting really stressed after 2 losses. You start being riskier because you want to try and make that money back! And before you know it you’re suddenly 1% away from hitting your daily drawdown. Figure out where your limit is and when to step away from your funded trading account before you blow it!
Adjusted trading plan for your funded trading account
There you have it! Adjusting your trading plan to suit your funded trading account isn’t as hard as it seemed, is it? Set aside 30 minutes tomorrow to get this sorted and you’ll be glad you got it done.
Want to become a funded trader? Sharpen your trading skills first at BullRush!
Curious about the pros and cons of being a funded trader? Check out this article next.