Meta Trader 4 Template System

A System refers to a set of trade rules which you adhere to to manage your trade transactions. These written rules will determine when you open a trade and when you will exit. A trade strategy is created by combining 2 or more technical indicators.

For example, the Stochastic can be combined with other indicators to make a system. For this illustration - stochastic oscillator indicator can be combined together with the indicators below to create the following system.

• RSI indicator
• MACD indicator
• MAs technical indicators

Example - MT4 Template System Example

Making a System - Strategy Example

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

Seven steps to creating a trading indicator based system

To create these set of trade rules we will use the following seven guidelines.

1. Choose and Select your Time-Frame

The first step depends on the number of hours you want to set a side to xauusd. Whether you prefer sitting in front of the computer constantly for several hours analyzing short chart timeframes OR you prefer setting up your charts using bigger and larger chart timeframes once or twice a day. Choosing/Selecting a timeframe will mainly depend on what type of trader you're.

Time Frames on MT4 Platform

While testing your new system you may want to find out about its performance on different time frames and then select the most accurate and profitable timeframe for you.

2. Choose & Select indicators to spot & identify a new trend

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

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

Moving Average Cross-over Strategy

Sell signal and Buy signal Generated by Moving Average Crossover XAU/USD Method

3. Choose and Select additional indicators to confirm the trend

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

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

RSI and Stochastic Indicator System

4. Finding entry and exit points

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

One should enter a trade as soon as a signal gets generated and confirmed after a candle closes.

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

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

Generating Signals - how to Generate Signals.

Generating Signals

For exits, a trader can either set an amount that they want to earn per trade or use technical tools that help to set profit goals like Fib expansion tool or set a protective stop loss depending on the market volatility at any specific time. Alternatively a trader can exit when the indicators gives a signal in the opposite market trend signal.

When opening a new trade transaction it's always important to calculate in advance how much you're willing to lose if the trade goes against you. Although the objective is to come up with the best strategy in the world, losses are inevitable & hence being ready to tell where you'll give up & cut your losses before beginning a trade is very important.

5. Calculate risks in each trading setup

In XAU/USD, you as a trader must calculate your risk for each transaction. Serious traders will only enter and look to open/execute an order if the risk : reward ratio is 2:1 or more.

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

The Risk : Reward Chart below indicates to you how:

Gold Money Management Risk:Reward Chart - Sample Template Trading Strategy

In the first examples of Risk to Reward Ratio, you as a trader can see that even if your xauusd system only won 50% of your positions, you'd still make profit of $10,000. Read more on this money management xauusd topic: Here Gold Money Management Rules - MetaTrader 4 Template System and Gold Capital Management Methods and Strategies - Template System Example.

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

6. Write down the systems xauusd rules and follow them

A Strategy refers to a set of trading rules that you follow to manage your trades.

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

The next systems lesson shows you an example of how to use above steps to come up with your own XAUUSD online system:

Next Lesson: Explanation Examples of Writing Systems Rules

7. Practice on a Practice Account

Without enough trades, you'll not be able to realize the true profitability of your trading strategy.

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

Open a free practice trading account and trade your trading strategy to see how well it will respond.

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

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

Study More Lessons and Topics:

• XAUUSD Psychology and Risk Management
• How Do I Place Force Index XAU/USD Indicator on Chart in MetaTrader 4 Platform?
• Learn XAUUSD Key Concepts in Gold Online
• Technique of Calculating Where to Set & Place Stop Loss XAUUSD Orders Using Trend lines
• Choppiness Index Indicator
• MetaTrader Nasdaq Index Nas100 MT5 Forex Platform
• How to Add Rate of Change Indicator on MT4 Charts
• Gold MT4 Platform Download Tutorial