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Forex Trading System Rules: Write Down The Rules and Follow Them

We shall use the previous steps to come up with a written Forex trading system that generates the trade signals shown below using the 1 hour Forex trading chart.

 

A Forex trading system refers to a set of rules that you follow to manage your trades.These rules must be written down so as to guide you. The following tutorial will show you how to write the rules of your Forex system.

 

The keyword is a SET OF RULES which you must follow. If you don't follow the rules then you don't have a Forex trading system. Forex systems must have rules which are written down within your Forex trading plan.

 

Look at the Forex system below:

Writing Rules of a Forex Trading System Example

Writing Rules of a Forex Trading System - 1 hour Chart Time frame Trading

 

 

You can come up with the above Forex currency trading system using the steps below:

Step 1:

Choose your Time Frame - 1 hour chart

Step 2:

Choose Indicators that identify a new trend- Moving Average Crossover System.

Step 3:

Choose Indicators that confirm the trend - RSI, Stochastic

Step 4:

Finding entry and exit points

Long Entry

  1. Both MA pointing up
  2. RSI above 50
  3. Stochastic oscillator going up

Short Entry

  1. Both MA pointing down
  2. RSI below 50
  3. Stochastic oscillator going down

 

Exit

  1. MA gives opposite signal
  2. RSI gives opposite signal

Step 5:

Calculating risks in each trade - 20 pips

Step 6:

Write down the trade system Forex rules

Step 7:

Test the system on a demo practice account

 

After using these steps we come up with the written Forex system rules below.

 

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Writing Trading System Forex Rules

Write Rules Forex Trading System - Writing Rules

Example of How to Write The Best Forex Trading System Rules

 

This system produces the signals as shown below. Using these rules traders can determine when to enter and exit trades.

Generate Buy and Sell Signal using Written System Rules

Generate Buy and Sell Signal using Written System Rules

 

We have completed writing the rules, if you are researching on how to create the best Forex system, this tutorial is a good start to guide you on how to do just that. This is one part of a the Forex trading plan. Now how do you create a complete Forex trading plan? To read about FX plan tutorial go to the right navigation menu of this website under Forex key concepts where you can find a link for this Forex trade plan topic.

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