TLDR;
Raja Banks shares his approach to creating a practical trading plan, emphasising simplicity and customisation to individual lifestyles. He advises against chasing the market and instead advocates for choosing specific trading times, focusing on appropriate currency pairs, and managing risk effectively. The key takeaways include:
- Choosing trading times that suit your lifestyle and sticking to them.
- Focusing on currency pairs that are active during your chosen trading session.
- Adopting a simple, consistent approach to technical analysis and risk management.
Introduction [0:00]
Raja Banks introduces himself as a trader and founder of Dominion Markets and Dominion Funding. He aims to provide insights into creating a trading plan without recommending specific indicators or strategies, focusing instead on practical steps applicable to individual traders.
Choosing Your Trading Time [1:03]
The initial appeal of Forex trading is its 24/5 availability, but Raja stresses the importance of choosing specific trading times that align with your lifestyle. He recounts his early trading days in Canada, where he identified 5:00 a.m. to 8:00 a.m. as his dedicated, distraction-free trading window. He advises viewers to assess their daily routines and pinpoint free time slots, then align those with appropriate trading sessions. Consistency in trading times is crucial for identifying recurring patterns and improving profitability.
Selecting the Right Session [2:56]
Once a time slot is identified, it's important to determine which trading session falls within that period. Raja shares his experience of initially focusing on the New York session due to his morning availability. He cautions against trading multiple sessions, as it can lead to distraction and reduced profitability. Each session moves differently, and sticking to one allows for better pattern recognition.
Choosing Active Currency Pairs [4:40]
Selecting currency pairs that are actively traded during your chosen session is vital. Raja uses the example of avoiding AUD/JPY during the New York session, as neither the Australian dollar nor the Japanese yen is actively traded then. For the London session, he favours gold or GBP/JPY due to the pound's high volatility. Spending time observing a currency pair's behaviour over two to three months is recommended to understand its unique personality within different sessions. Raja advises focusing on no more than two pairs to avoid over-complication.
Risk Management Strategies [8:16]
Raja addresses the importance of risk management, clarifying that it's not just about risk-reward ratios. He shares his early experiences of aiming for 1:3 or 1:5 risk-reward ratios, only to find that trades often retraced after reaching a 1:1 profit level. He suggests analysing past trades to identify the most common profit points and securing gains at the 1:1 level. Raja introduces the concept of dynamic risk, where traders manage their risk before entering a trade by dividing their position into smaller lots. He advises against taking too many trades per day, as it hinders effective journaling and analysis.
Goal Setting and Time Frames [11:06]
Raja expresses his opposition to setting fixed monthly or weekly profit goals, arguing that it can create undue pressure and lead to poor trading decisions. He recounts an experience where he chased a small profit to reach a round number, resulting in significant losses. Instead, he recommends focusing on achieving a winning trade and replicating that success. Raja also highlights the importance of choosing appropriate time frames, recommending the 1-hour and 30-minute charts for analysis and confirmations. He aims for 10-15 pips per trade and doesn't worry about further market movements.
Technical Analysis and Trade Management [13:44]
Raja discusses the importance of valid support and resistance levels and ensuring enough range for price movement. He advises against hoping for resistance or support to break, as hope is not a reliable strategy. He emphasises waiting for a candle to close in your favour on the 30-minute time frame to validate a trading idea. Raja stresses the importance of being comfortable with your gains, even if they are small. He shares that many traders win their first few trades but struggle to manage their positions afterwards. He advises closing partials to secure profits and reduce potential losses, especially when a trade is likely to hit the stop-loss.
Journaling and Simplicity [18:57]
Raja recommends journaling trades by taking screenshots before and after analysis to track progress. He advocates for simple, clean price action analysis without complicated indicators. He concludes by reiterating the key steps to creating a trading plan: choosing a trading time, selecting an appropriate session, focusing on active currency pairs, managing risk, and using straightforward technical analysis. He emphasises that successful trading doesn't need to be complicated and that a simplified approach is often the most effective.
