How to Generate Trading Signals With Commodity Trading Systems
Commodities Trading MT4 Signal Technical Indicator
The only method of commodity trading is through commodities trading signals, It is best to learn how to generate these commodity signals for yourself, this way you do not have to rely on other traders to generate them for you.
Generating commodity signals isn't easy and requires you to have a lot of commodity technical analysis knowledge & experience, but the earlier you begin practicing how to generate these commodity signals for yourself the better it's for you.
A good technique of how to practice generating commodity trading signals with commodity trading systems is to open a free practice Commodity practice account & test your trading signals on this practice account risk free without risking your money, then once you have tested your commodity strategies & they are profitable on the demo practice account you can the use these commodity trading signals on a live commodities trading account.
The method of how to practice generating these commodity signals as well as how to back test the commodity trading signals on the demo commodity account using MT4 commodities trading platform is discussed below:
So, How Can a Trader Generate Commodity Trade Signals?
The best method of generating commodity trading signals is through commodity systems, You can Learn how to come up with commodity trading systems from the lesson how to create Trading Systems on the right navigation menu under the tutorials Commodity Trading Key Concepts.
A commodities trading system is a combination of one or two or more technical indicators with written trading rules of how these indicators will generate these commodity signals.
Take an example of the simplest trading system or strategy known as moving average crossover method. A buy signal or sell signal is generated when there is a cross-over of the 2 moving averages: either a buy signal for an upward moving average crossover or a sell signal for downwards trend.
Generating Commodities MT4 Free Signals - Commodity Signals MetaTrader 4 Technical Indicator Strategy Moving Average Crossover Method
The trading system example shown below shows a commodity trading system using the above moving average strategy combined with the RSI and MACD indicators to generate buy & sell commodities trades.
Example of Generating Commodities MT4 Free Signals - Commodity Signals MetaTrader 4 Technical Indicator Strategy
When it comes to generating buy & sell signals, commodities traders should use simple commodity trading systems to generate these commodity signals.
Generating Commodities MT4 Free Signals - Commodity Signals MetaTrader 4 Technical Indicator Strategy - Buy & Sell Trading Signals
Commodities Trading MT4 Signal Indicator
An example of a simple commodity system that works, is one that's a combination of:
- Moving average crossover strategy
- RSI
- MACD
The written commodity trading rules are:
Generating Commodity Signals Strategy System Examples
Commodity Trade Rules:
Buy Commodity Trading Signal is Generated when:
- Both Moving averages going up
- RSI value above 50
- MACD above center line
Sell Commodity Trading Signal is Generated when:
- Both Moving averages going down
- RSI value below 50
- MACD below centerline
Generating Buy and Sell Commodity Trades - Example of a Strategy
Exit Trading Signal
Exit trading signal is generated when MA, RSI and MACD indicator give a signal in opposite direction.
The commodities trading chart time-frame to use is 1 H commodities trading chart time frame or 15 minutes chart time frame depending on what type of trader you are.
For a beginner trader the above written trading rules will give good buy & sell commodity signals, the only thing which a trader needs to do is to have the discipline to follow the written commodity trading signals rules the exact way they are, and wait for a buy or sell trade transaction to be indicated by your commodity strategy & trade after the signals have been generated, not before they are generated.
Back Testing
Generating Trading Signals with a trading system is one of the easiest method to trade commodity , it is the best way that a commodity trading beginner trader can attempt to determine direction of the market commodity trend with a good level of accuracy, and with a little backtesting on practice trading account so as to gradually increase the level of accuracy of this commodity trading signals strategy
The best way to back test a commodity trading strategy is by following these two steps:
- Commodity Trading Paper Trade
- Commodities Demo Trade
Commodity Trading Paper Trading - This method of testing a commodity system involves placing your trading system on the commodity 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 commodity trading strategy would have given buy, sell and exit trading 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 commodities trades such as 50 paper trades commodity trading transactions and determine if your trading method is overall profitable, the win ratio, the loss ratio and the risk:reward.
This is an ancient method of testing commodity systems that was used by traditional traders when there was no online commodity 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 commodity trading 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 commodity market and draw the commodity charts on paper, anyway for our paper method examples, just a sample data of 50 trade transactions is all we need.
A good commodity trading tool to use to backtest your commodities trading system is known as the MetaTrader 4 Commodity Trading Step by Step Tool. Found in MetaTrader 4 charts tool-bar of MT4 commodities trading platform, If you want to find the charts toolbar on the MT4 platform it is at top of the MT4 commodity trading platform. If it is not: Click View (next to file, top-left corner of MT4)>>> Tool Bar >>> Charts. Then click the Customize button >>> Select Commodity Trading Step by Step >>> Click Insert >>> Close.
MetaTrader 4 Commodity Trading Platform Chart Tool-Bars - How to Trade Commodity Trading For Beginner Traders
MetaTrader 4 Chart ToolBars - Commodity Step by Step Button Key for Back Testing Commodity Trading Systems Explained
Once you get this MT4 tool you can move your commodity chart backwards, & use this MT4 tool to move the charts step by step while at the same time testing when your commodity trading 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 commodity trade transaction and out of a sample number of commodity trading transactions you would then calculate the overall profits/losses generated by the trading strategy.
If your commodity strategy is profitable on the paper then, it is time to demo commodities trade & testing if the it is profitable on the real market as it's on paper trading technique. This is the process of testing or back-testing a trading system.
Writing a Commodities Trading Journal
Maintain a Commodity Journal to keep track of profitable commodity trades, & 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 strategy.
Tweak your Commodities trading system until you get a good risk:reward ratio, with the commodity trading 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 commodity trading money management even a commodity trading strategy with a win ratio of even 30% i.e. Less than half of your commodity trading 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 to Reward Ratio Chart of Commodity Trading Money Management Strategy - Commodity Trading Strategies Described
Read Commodity Trading Money Management Methods Guide
A manual commodity trading system is still the best way to generate commodity signals compared to automated trading systems, a manual strategy is a better technique & is also much simpler to implement.
However, other traders prefer automated commodity trading systems & for those then they can check the information on this page MQL5 Commodity Expert-Advisors & automated commodity trading systems.
You can also view our extensive list of commodity trade strategies topics that provides you with various methods of buy & sell technical analysis using a number of diverse technical methods, navigate to the Commodity Trading Strategies Section.
