Creating a Energy Trading System: Indicator Based Energy Strategy

A Energies Trading System refers to a set of energies rules that you follow to manage your trades. These written energies rules will determine when you open a trade and when you will exit. A energies trade system is created by combining 2 or more technical indicators.

For example, the Stochastic Oscillator technical indicator can be combined with other indicators to form a energies system. For this example - stochastic oscillator can be combined with the technical indicators below to come up with the following system.

• RSI indicator
• MACD indicator
• Moving Averages indicators

Example - MT4 Template Trading System Example

Creating a Trading System - Energies System Template Examples

So the question is how can a trader come up with energies systems that work like the energies system example above and how does one write it's energies rules? to write the energies system trading rules follow the steps below.

Seven steps to creating an technical indicator based trading system

To come up with these set of energies rules we use the following seven steps.

1. Choose your Chart Time Frame

This first step depends on how many hours you want to dedicate to energies. Whether you prefer sitting in front of the computer constantly for several hours analyzing short energies chart timeframes OR you prefer setting up your charts using bigger chart timeframes once or twice a day. Choosing a chart timeframe will mainly depend on what type of trader you are.

Energies Chart Time Frames on MT4 Software

While testing your new trading system you may want to find out about its performance on different chart timeframes and then choose the most accurate and profitable chart timeframe for you.

2. Choose indicators to identify a new trend

The goal of a trader is to get into the trade as early as possible and take maximum advantage of price moves.

One of the common ways to spot a new trend as fast as possible is to use Moving Averages Indicator. A simple strategy is to use a MA crossover system that will identify a new trading opportunity at its earliest stage.

Moving Average Crossover Method

Sell signal & Buy energies signal Generated by Moving Average Crossover Energies Trading Method

3. Select additional indicators to confirm the trend

Once we find a new trend we need to use additional indicators that will confirm the entry energies signals and give either a green light for action or save a trader from fake outs.

To confirm the signals we use RSI indicator & Stochastic Oscillator indicator.

RSI Energies Indicator & Stochastic Oscillator Indicator Strategy

4. Finding entry and exit points

Once technical indicators are chosen so that one indicator gives the trading signal and another indicator confirms the trading signal, it is time to enter a trade.

A trader should enter a trade as soon as a energies signal is generated and confirmed after a candlestick closes.

Aggressive traders enter a trade transaction immediately without waiting for the current energies price bar to close.

Other traders wait until the current energies price bar is closed and then enter the trade transaction if the trade setup has not changed and the signal remains valid. This method is more considerate and prevents additional false entries and fakeout whipsaws.

Generating Signals - how to Generate Trading Signals.

Generating Trade Signals

For exits, a trader can either set an amount that wants to earn per trade or use technical tools that help to set profit goals like Fibonacci expansion tool or set a protective stop loss depending on the market volatility at any given time. Alternatively a trader can exit when the indicators give an opposite trading signal.

When opening a new trade transaction it is always important to calculate in advance how much you are willing to lose if the trade goes against you. Although the goal is to create the best energies trading system in globe, losses are inevitable and therefore being ready to tell where you will give up and cut your losses before starting a trade is very important.

5. Calculate risks in each Energy trade setup

In Energies, you must calculate your risk for each trade. Serious traders will only enter and look to open an order if the risk:reward ratio is 2:1 or more.

If you use a high risk to reward like 2:1, you significantly increase your chances of becoming profitable in the long run.

The Reward to Risk Chart below shows you how:

Energies Trade Money Management Reward Risk Chart - Example Template Trading Strategy

In the first example of Risk to Reward Ratio, you can see that even if your energies system only won 50% of your trades, you would still make profit of $10,000. Read more on this energies money management energies topic: Here Energies Trade Money Management Rules - MT4 Template Trading System and Energies Trade Money Management Methods - Template Trading System Example.

Before opening a new trade, a trader should define the point at which they will close the trade if it turns to be a losing trade. Some traders use Fibonacci retracement levels tool and support & resistance zones. Other traders just use a pre-determined stop loss to set stop loss orders once they have opened a trade transaction.

6. Write down the energies systems energies rules and follow them

A Energies Trade System refers to a set of rules that you follow to manage your trades.

The keyword is A SET OF TRADING RULES which you must follow. If you don't follow the energies rules then you don't even have a energies system in the first place.

The next energies systems lesson portrays to you an example of how to use the above steps to come up with your own Energies Trading online energies system:

Next Lesson: Example of Writing Trade Systems Rules

7. Practice on a Practice Account

Without enough trades, you will not be able to realize the true profitability of your system.

Once you have your energies system rules written, it is time to test and improve your trade system by using it on a demo practice account.

Open a free practice practice account & trade your energies system to see how well it will respond.

It is strongly recommended to start with a demo account and practice for at least for 1 or 2 months so as to gain some practice and experience how the market works.

Once you start making some decent profit on your demo account you can then try opening a live trading account & begin trading with real money.