Creating a System - Examples System Templates - MT4 Templates Trading Systems
When creating your own trading system, there are a few things to keep in mind. Your strategy needs to be able to spot new forex market trends, while at the same time making sure you do not to get faked out/whipsaws. The real trick is, once you have created a system that works for you, stick to it. Being disciplined will help you a lot in becoming successful in forex trading.
Before trading forex on a live forex account, you have to figure out what trading strategy works for you. It's good to know in what chart timeframe you're going to be working in, & how much you are willing to risk once you start forex trading online. All these factors should be factored in, & should be written down within your trading plan. A good place to test this forex trading plan would be on a free demo trading account. This is where you test your trade strategies risk free without investing money to determine which trading strategy is best suited for you.
So, now how can a trader like you come up with a "good trading system" or the "best trading system"?
To come up with a good trading strategy the first thing to do is to define your objective or goal:
The following example illustrates a goal & explains the rules of how to achieve that goal
Goals - Trading System Goals
1. Identify a new forex trend
Moving average crossover method trading strategy is the most commonly used strategy to identify a new forex trend. The time to open a long or short trade is determined when 2 moving averages indicators cross over or cross under each other.
2. Confirm the new forex trend
Relative Strength Index(RSI) Indicator and Stochastic Oscillator Indicator are the most commonly used technical technical indicators to confirm a Forex trend.
Indicator based Trading System
The best type of a forex trading method is one that is indicator-based. You will find it straight forward to generate the forex signals & thus less error-prone on your part & this will help you to avoid market whipsaws.
There are several things we want to achieve when creating a Forex Trading System:
- Find entry points as early as possible.
- Find exit points securing maximum gains.
- Avoid fake entry and exit signals.
- Proper Money Management Rules
Accomplishing these four goals will result in a profitable strategy that works.
The last piece of information needed, is deciding how aggressive you are going to be when entering and exiting a forex trade. Those traders who are more aggressive wouldn't wait until the forex chart candle closes & would enter as soon as their indicators match up. But most traders would wait until the forex chart candlestick of the chart timeframe they are using has closed, to have more stability when entering a the market.
To get profits out of the forex market you need to build your own profitable trading system: a trading technique that will generate profitable forex signals. You need to have your own strategy that will help you achieve your financial goals. Sometimes the best trading systems are the ones that you build on your own. No need to keep searching online for the best trading systems or for Forex trading systems which work, this site provides you with all the forex tools required to help you & guide you on how to create your own forex systems.
Shown Below is example of a forex trade system based on RSI, MACD and Stochastic.
Trading System - MT4 Templates Trading Systems
The trading system example above is comprised of four technical indicators in total, all of these generate trade signals using different methods, the moving average will generate forex signals using the moving average crossover method shown, the RSI indicator, Stochastic indicator & MACD indicator use different technical analysis to generate the long and short signals as shown in the above example. How to generate these forex signals is discussed in the next topic (on the sidebar navigation learn forex lessons menu under key concepts).
For beginner traders, it's difficult for them to create their own Forex strategies since they don't have a lot of knowledge about the FX market. However, this learn forex trading site will explain how a beginner trader can create their own free Forex system in just seven easy steps. Best strategy is the one you come up with yourself and learn how to trade the forex market with it.
The main advantage of creating your own free trading systems is that you will know how to trade with it and make profits by yourself - and not rely on other peoples efforts.
In the next lesson located at the sidebar navigation learn trading courses menu below the forex key concepts will show you how to create a trading system like the one above, write it's forex rules & how to back-test the trading system on a practice forex trading practice account before using it on a live forex account.
4 Examples of Free Systems - MT4 Templates Trading Systems
Example 1: The Moving Average Crossover Method - Trading Strategy
The moving average indicator cross over method uses two moving averages to generate forex signals. First Moving average uses a shorter period and the second is a longer period moving average.
Moving Average Crossover Technique - Moving Average Crossover Trading Strategy
This above trading method is referred to as the moving average crossover method because FX signals get generated when the two averages cross above or cross below each other.
Forex System Trading Example - Short and Long trading signal Generated by Trading System
A buy signal or going long trade is generated when the shorter moving average indicator crosses above longer moving average technical indicator (Both Moving Averages Going Up).
A sell signal or a going short trade is generated when the shorter average indicator crosses below the longer moving average technical indicator (Both Moving Averages Moving Down).
Example 2: Stochastics System - MT4 Templates Trading Systems
Stochastic Oscillator technical indicator can be combined with other indicators to form a trading system.
- RSI indicator
- MACD indicator
- Moving Averages indicators
Trading Systems Example - MT4 Templates Trading Systems
Short Signal or Sell Signal
How the short sell signal was generated
From our forex trading rules the short sell signal is generated when:
- Both Moving Averages are heading down
- RSI is below 50
- Stochastic moving downward
- MACD heading downward below center-line
The short signal was generated when all the written forex trading rules were met. The exit signal is generated when a forex signal in opposite trade direction is generated.
Good thing about using such a trading method is that we are using different types of technical indicators to confirm the forex signals & avoid as many whipsaws as possible in the process.
- Stochastic - forex momentum oscillator indicator
- RSI - forex momentum oscillator indicator
- Moving Averages Technical Indicator - forex trend following indicator
- MACD - forex trend following oscillator
Based on the chart time frame used - this strategy can be used as Forex scalping system when the minute charts are used or as a Forex day trading system when hourly charts are used.
Example 3: Trading System Forex Trading Example
This system is fully described within the trading plan on the trading plan tutorial on this learn forex website under the key concepts section located on the right navigation menu.
Chart Time Frame
1 hour chart
Trading Technical Indicators which spot a new forex trend
Moving Average Crossover Technical Indicators Strategy
Indicators that confirm the forex trend
RSI indicator
STOCHASTIC OSCILLATOR trading indicator
Long Entry - Buy Signal
1. Both MA(moving averages) pointing up
2. RSI above 50
3. Both stochastics going up
Short Entry - Sell Signal
1. Both MA pointing down
2. RSI below 50
3. Both stochastics going down
Exit Signal
1. MA Indicator gives opposite signal
2. RSI gives opposite signal
Risk Management in FX Trading
Stop loss- 35 pips
Take Profit- 70 pips
Reward to Risk 2:1
Example 4: New Gann Swing Chartist Plan - MT4 Templates Trading Systems
The Gann Swing Oscillator is meant to be used in combination with the Gann HiLo Activator & Gann Trend to form a complete strategy commonly referred to as the - 'New Gann Swing Chartist Plan'. Within this methodology the Gann Swing Oscillator is used to help determine forex market swings for trading only within the current market trend is shown by the Gann Trend.
Shown Below is the examples of New Gann Swing Chartist Plan
The Gann Chartist Plan - Systems - MT4 Template Trading System
