How to Generate CFD Signals With CFD Systems

Generating CFDs MT4 Free Signals

The only method of cfd is through trading signals, It is best to learn how to generate these cfd signals for yourself, this way you do not have to rely on other traders to generate them for you.

Generating cfd trading signals is not easy & requires you to have a lot of cfds technical analysis knowledge and experience, but the earlier you begin practicing how to generate these cfd signals for yourself the better it is for you.

A good technique of how to practice generating cfd trading signals with cfd trading systems is to open a free practice CFD Trading demo account & test your cfd signals on this practice account risk free without risking your money, then once you have tested your cfd strategies and they are profitable on the cfd practice account you can then use these cfd signals on a live trading account.

The technique of how to practice generating these cfd signals as well as how to back test the cfd signals on the demo cfd account using the MetaTrader 4 cfds trading platform is discussed below:

So, How Can a Trader Generate CFD Trade Signals?

The best method of generating cfd signals is through cfd trading systems, You can Learn how to come up with cfd trading systems from the lesson how to create CFD Systems on the right navigation menu under the topics CFD Trading Key Concepts.

A cfds system is a combination of one or 2 or more indicators with written cfd guidelines of how these indicators will generate these trade signals.

Take an example of the simplest cfd system or cfd strategy known as MA cross over cfd method. A buy cfd signal or sell signal is generated when there is a crossover of the two moving averages: either a buy cfd signal for an upward moving average cross over or a sell signal for downward trend.

Generating CFD Trading MetaTrader 4 Free Signals - CFD Signals MT4 CFD Indicator Strategy Moving Average Crossover Technique

The cfd system example shown below shows a trading system using the above moving average strategy combined with the RSI and MACD indicators to generate buy & sell cfds trades.

Example of Generating CFD Trading MetaTrader 4 Free Signals - CFD Signals MT4 CFD Indicator Method

When it comes to generating buy & sell signals, cfds traders should use simple cfd systems to generate these trade signals.

Generating CFD Trading MetaTrader 4 Free Signals - CFD Signals MT4 Indicator Strategy - Buy and Sell Signals

Generating CFDs MT4 Free Signals

An example of a simple trading system that works, is one that is a combination of:

• Moving average cross over strategy
• RSI
• MACD

The written cfd rules are:

Generating Signals Strategy - CFD System Examples

CFD Trade Rules:

Buy Trading Signal is Generated when:

• Both Moving averages going up
• RSI value above 50
• MACD above center line

Sell Trading Signal is Generated when:

• Both Moving averages going down
• RSI value below 50
• MACD below centerline

Generating Buy and Sell Trades - Examples of a CFD Method

Exit Trading Signal

Exit signal is generated when MA, RSI & MACD indicator give a signal in the opposite direction.

The chart timeframe to use is 1 hour chart timeframe or 15 minutes chart timeframe depending on what type of trader you are.

For a beginner cfd trader the above written cfd rules will give good buy & sell signals, the only thing which one needs to do is to have the discipline to follow the written signals rules the exact way they are, and wait for a buy or sell trade transaction to be indicated by your cfd strategy and trade after the signals have been generated, not before they are generated.

Back Testing

Generating Signals with a cfd system is one of the easiest method to trade cfd trading, it is the best way that a beginner can attempt to determine the direction of the market cfd trend with a good level of accuracy, and with a little back testing on demo trading account so as to gradually increase the level of accuracy of this trading signals strategy

The best way to back test a cfds strategy is by following these 2 steps:

1. CFD Trading Paper Trade
2. CFD Trading Demo Trade

CFD Trading Paper Trading - This method of testing a cfd system involves placing your cfd system on the charts, then take the chart back to a particular date, 3 months back for example, and then using this chart history to determine where your cfd strategy would have given buy, sell and exit cfd signals. Write down these points and the profit per trade transaction on a piece of paper and then calculate the total profit after you have recorded a good number of trades such as 50 paper trades transactions and determine if your cfd method is overall profitable, the win ratio, the loss ratio and the risk: reward.

This is an ancient method of testing cfd systems that was used by traditional traders when there was no online cfd markets or computers for that matter, the trader would use something like the A3 or A2 paper, graph format paper and draw the charts manually (Imagine plotting the charts on your cfd platform by hand every day or every hour, would you be ready to do that? I doubt) Those investors were hardworking than most, some were so used that they still continue to paper trade the online cfd market & draw the charts on paper, anyway for our paper technique examples, just a sample data of 50 trade transactions is all we need.

A good cfd tool to use to back test your trading system is known as the MT4 CFD Step by Step Tool. Found on MT4 charts tool bar of MT4 cfds trading platform, If you want to find the charts toolbar on the MT4 platform it is at the top of MetaTrader 4 cfds platform. If it is not: Click View (next to file, tops left corner of MetaTrader 4)>>> Tool Bar >>> Charts. Then click the Customize button >>> Select CFD Step by Step >>> Click Insert >>> Close.

MT4 Platform Chart Tool Bars - How to Trade CFD For Beginner Traders

MT4 Chart Tool-Bars - CFD Step by Step Button for Back Testing CFD Systems Explained

Once you get this MT4 tool you can move your cfd chart backwards, & use this MT4 tool to move the charts cfd step by step while at the same time testing when your cfd system would have generated either a buy or sell trade transaction, and where you would have exited the trade, then write-down the amount of profit/loss per cfd trade transaction & out of a sample number of cfd transactions you would then calculate the overall profits/losses generated by the cfd strategy.

If your cfd strategy is profitable on the paper then, it's time to demo cfd trade & testing if the it's profitable on real market as it's on paper method. This is the process of testing or backtesting a trading system.

Writing a Trading Journal

Maintain a CFD Journal to keep track of profitable cfd trades, and determine why these trades were profitable. And also keep a log of all losing trades, determine why these trades made a loss and the avoid making these same mistakes the next time you trade using your cfd strategy.

Tweak your cfd system until you get a good risk to reward ratio, with cfd signals that you generate. Aim for a good risk: reward of 3:1 and a win ratio of above 70% is a good ratio, with good cfd money management even a strategy with a win ratio of even 30% i.e. Less than half of your transactions make profit you can still make a profit. You might want to read this topic to know what the table below is all about: Risk : Reward Ratio.

Risk-:-Reward Ratio Chart of CFDs Money Management Strategy - CFD Strategies Explained

Read CFDs Money Management Methods Guide

A manual cfd system is still the best way to generate cfd signals compared to automated cfd systems, a manual strategy is a better method and is also much simpler to implement.

However, other traders prefer automated cfd trading systems & for those then they can check the information on this page MQL5 Expert Advisors & automated cfd trading systems.

You can also view our extensive list of cfd strategies topics that provides you with various methods of buy & sell technical analysis using a number of diverse technical methods, navigate to the Learn Strategies Section.