Published on Nov 8, It's time to create your own forex trading system! You can spend your time developing your own system for free, and use that money you were going to spend on purchasing a system as capital for your trading account.
It is not difficult. What's difficult is following the rules that you set when you do develop your system. Clipping is a handy way to collect and organize the most important slides from a presentation. You can keep your great finds in clipboards organized around topics. SlideShare Explore Search You.
School of Pipsology's Skinny on For Show related SlideShares at end. Full Name Comment goes here. Are you sure you want to Yes No. I am anxious because I truly want you to be able to take the advantage of this if you really are a serious trader with the hope and determination to make millions from this platform.
You just need a right trading tool like Andy Lank System to trade for you. Clement Moerane , Student at pfur. Embeds 0 No embeds.
No notes for slide. These systems supposedly make thousands of pips a week and never lose. There are some things you should know before you give them your credit card number and make that impulse buy. The truth is that many of these systems DO in fact work.
The problem is that traders lack the discipline to follow the rules that go along with the system. The second truth there's such thing as a second truth? The third truth is that creating systems is not even that difficult. What is difficult is following the rules that you set when you do develop your system. This lesson will guide you through the steps you need to take to develop a system that is right for you. At the end of the lesson, we will give you an example of a system that we trade just so we can show you how awesome we are!
Insert evil laugh here. When developing your system, you want to achieve 2 very important goals: Your system should be able to identify trends as early as possible. Your system should be able to avoid you from whipsaws. The hard part about those goals is that they contradict each other. If you have a system in which its sole purpose is to catch trends early, then you will probably get faked out many times.
On the other hand, if you have a system in which its sole purpose is to avoid whipsaws, then you will be late on many trades and will also probably miss out on a lot of trades. Your task, when developing your system, is to find a compromise between the two goals. Find a way to identify trends early, but also find ways that will help you distinguish the fake signals from the real ones. Always remember these two goals when you create your system. They will make you a lot of money! The main focus of this article is to guide you through the process of developing your system.
So be patient; in the long run, a good system can potentially make you a lot of money. Time Frame The first thing you need to decide when creating your system is what kind of trader you are. Are you a day trader or a swing trader? Do you like looking at charts every day, every week, every month, or even every year? How long do you want to hold on to your positions?
This will help determine which time frame you will use to trade. Even though you will still look at multiple time frames go back to 7th grade if you forgot , this will be the main time frame you will use when looking for a trade signal. Find indicators that help identify a new trend.
Since one of our goals is to identify trends as early as possible, we should use indicators that can accomplish this. Moving averages are one of the most popular indicators that traders use to help them identify a trend. Specifically, they will use 2 moving averages one slow and one fast and wait until the fast one crosses over or under the slow one.
In its simplest form, moving average crossovers are the fastest ways to identify new trends. It is also the easiest way to spot a new trend. The way we do this is by making sure that when we see a signal for a new trend, we can confirm it by using other indicators.
As you become more familiar with various indicators, you will find ones that you prefer over others, and can incorporate those into your system. Define Your Risk When developing your system, it is very important that you define how much you are willing to lose on each trade. Not many people like to talk about losing, but in actuality, a good trader thinks about what they could potentially lose BEFORE thinking about how much they can win.
The amount you are willing to lose will be different than everyone else. You have to decide how much room is enough to give your trade some breathing space, but at the same time, not risk too much on one trade.
Money management plays a big role in how much you should risk in a single trade. Others like to wait until the close of the candle. In my experience, I have found that it is best to wait until a candle closes before entering. I have been in many situations where I will be in the middle of a candle and all my indicators match up, only to find that by the close of the candle, the trade has totally reversed on me!
Some people are more aggressive than others and you will eventually find out what kind of trader you are. For exits, you have a few different options. Another way to exit is to have a set target, and exit when the price hits that target. How you calculate your target is up to you. Some people choose support and resistance levels as their targets.
Others just choose to go for the same amount of pips on every trade. However you decide to calculate your target, just make sure you stick with it. Never exit early no matter what happens.
Stick to your system! After all, YOU developed it! One more way you can exit is to have a set of criteria that, when met, would signal you to exit. For example, you could make it a rule that if your indicators happen to reverse to a certain level, you would then exit out of the trade. This is the most important step of creating your trading system.
Discipline is one of the most important characteristics a trader must have, so you must always remember to stick to your system! How to Test Your System The fastest way to test your system is to find a charting software package where you can go back in time and move the chart forward one candle at a time. When you move your chart forward one candle at a time, you can follow your trading system rules and take your trades accordingly.
Record your wins, losses, average win, and average loss. If you are happy with your results then you can go on to the next stage of testing: Trade your new system live on a demo account for at least two months. This will give you a feel for how you can trade your system when the market is moving.
After two months of trading live on a demo account, you will see if your system can truly stand its ground in the market. If you are still getting good results, then you can choose to trade your system live on a REAL account. At this point, you should feel very confident with your system and feel comfortable taking trades with no hesitation.
This should give you an idea of what you should be looking for when you develop your system. Okay, let's take a look at some charts and see this baby in action As you can see, we have all the components of a good trading system. Next, we use moving averages to help us identify a new trend as early as possible.
The RSI is an extra confirmation tool that helps us determine the strength of our trend. After figuring out our trade setup, we then determined our risk for each trade. For this system, we are willing to risk 30 pips on each trade. Usually, the higher the time frame, the more pips you should be willing to risk because your gains will typically be larger than if you were to trade on a smaller time frame.
Next, we clearly defined our entry and exit rules. At this point, we would begin the testing phase by starting with manual back tests. Here are a couple of examples:More...