What is the Difference Between a Forex Trading Plan and a Trading Strategy?

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What is the Difference Between a Forex Trading Plan and a Trading Strategy?
Source: Flickr/TheAlieness GiselaGiardino23
Currency trading is full of plans, strategies, systems and rules, so it is easy to get confused. However, it is important to know the difference between two of your most important tools – your trading strategy and your trading plan.

A forex trading strategy is simply a collection of rules that determine how you enter and exit trades. A trading strategy can be summed up in a few lines and traders often employ several different strategies depending on how the market is moving. Some traders call the collection of strategies a trading system or refer to trading strategies as trading systems and call the collection of systems a trading strategy. Simply put, a trading system and a trading strategy are used interchangeably and focus how a trade is done.

A trading plan, however, is a more comprehensive document that includes the trading strategy along with other important information. Trading plans are customized to the person using them, but they usually include rules about money management, how much capital to risk in a day, the goals the trader is striving for, a system for analyzing trades, and so on.

Trading strategies and trading plans are both works in progress in that they are constantly being tweaked and evaluated. (For more, check out 7 Tips for Successful Forex Trading.)

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