Meta Trader 4 Template System

A System refers to a set of rules that you follow to manage your trades. These written rules will determine when you open a trade & when you will exit. A trade system is created by combining two or more indicators.

For example, the Stochastic Oscillator indicator can be combined with other indicators to form a system. For this example - stochastic oscillator can be combined with the indicators below to come up with the following system.

• RSI indicator
• MACD indicator
• MAs indicators

Example - MetaTrader 4 Template System Example

Creating a System - System Example

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

Seven steps to creating an indicator based system

To come up with these set of rules we use the following seven steps.

1. Choose your Timeframe

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 chart timeframes once or twice a day. Choosing a chart timeframe will mainly depend on what type of trader you are.

Time Frames on MetaTrader 4 Software

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

2. Choose indicators to identify a new trend

The goal of a trader is to get into the trade as early as possible & 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 cross-over system that will identify a new opportunity at its earliest stage.

MA Crossover Strategy

Sell signal & Buy signal Generated by Moving Average Cross Over XAUUSD Method

3. Choose additional indicators to confirm the trend

Once we find a new 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.

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

RSI Indicator and Stochastic Oscillator Indicator System

4. Finding entry & 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.

A trader should enter a trade as soon as a signal gets generated & confirmed after a candlestick closes.

Aggressive traders enter a trade transaction 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 transaction if the trade setup has not changed and the signal remains valid. This method is more considerate and prevents additional false entries and fakeout whipsaws.

Generating Signals - how to Generate Signals.

Generating Trade Signals

For exits, a trader can either set an amount that wants to earn per trade or use technical tools that help to set profit goals like Fibonacci 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 give an opposite signal.

When opening a new trade transaction it is 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 system in globe, losses are inevitable and therefore being ready to tell where you will give up and cut your losses before beginning a trade is very important.

5. Calculate risks in each trading setup

In XAUUSD, you must calculate your risk for each trade. Serious traders will only enter & look to open 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 to Reward Chart below shows you how:

Gold Money Management Reward Risk Chart - Example Template System

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

Before opening a new trade, a trader should define the point at which they will close the trade if it turns 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 to set stop loss orders once they have opened a trade trade.

6. Write down the systems xauusd rules and follow them

A Trade System refers to a set of rules that you follow to manage your trades.

The keyword is A SET OF TRADING RULES which you must follow. If you do not follow the 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: Examples of Writing Trade Systems Rules

7. Practice on a Demo Account

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

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 & trade your system 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 gain some practice and experience how the market works.

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