Making a AUDCHF Indicator Based AUDCHF System

A AUDCHF System refers to a set of AUDCHF rules that you follow to manage your AUDCHF trades. These AUDCHF rules will determine when you open a AUDCHF trade & when you'll exit. A AUDCHF trade system is created by combining 2 or more indicators.

For example, the Stochastic Oscillator can be combined with other indicators to form a AUDCHF system. For this example stochastics can be combined with the indicators below to come up with the following AUDCHF system.

• RSI
• MACD
• MAs Trading Indicator

Example

Creating a AUDCHF System - AUDCHF System Trading Example

So the question is how can one come up with a AUDCHF systems that works and how does one write its rules? Follow the steps below:

Seven steps to creating an indicator based AUDCHF system

To come up with these set of rules for AUDCHF currency pair we use the following seven steps.

1. Choose your AUDCHF Time Frame

The first step depends on the number of hours you want to dedicate to AUDCHF trading. Whether you prefer sitting in front of the Desktop computer constantly for several hours analyzing short AUDCHF time frames OR you prefer setting up your charts using bigger AUDCHF time frames once or twice a day. Choosing a charts time frame will mainly depend on what type of AUDCHF currency trader you are.

AUDCHF Chart Time Frames in MetaTrader 4 - AUDCHF MT4 Chart

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

2. Select indicators to identify a new trend

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

One of the common ways to identify a new AUDCHF trend as fast as possible is to use Moving Averages Indicator. A simple system is to use a moving average cross-over system that will identify a new AUDCHF setup opportunity at its earliest stage.

MA Crossover Technique - AUDCHF System

AUDCHF Sell signal and AUDCHF Buy signal Generated by MA Crossover Strategy

3. Choose additional indicators to confirm the AUDCHF market trend

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

To confirm the signals we use RSI and Stochastic Oscillator.

RSI & Stochastic Oscillator AUDCHF System

4. Finding entry & exit points

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

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

Aggressive AUDCHF traders enter a transaction immediately without waiting for the current price bar to close.

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

Generating AUDCHF Signals

Generating AUDCHF Trade Signals

For exits, a trader can either set an amount he wants to earn per trade or use technical tools that help to set profit goals like Fibo Expansion Indicator or set a protective stop loss depending on the AUDCHF market volatility at any one particular time. Alternatively one can exit when the indicators give an opposite signal.

When opening a new AUDCHF trade transaction it's always important to calculate in advance how much you are willing to lose if the AUDCHF transaction goes against you. Although the goal is to create the best AUDCHF system in world, losses are inevitable and therefore being ready to tell where you'll give up and cut your losses before starting a AUDCHF trade transaction is very important.

5. Calculate risks in each AUDCHF trading setup

In you must calculate your risk for each AUDCHF trade. Serious AUDCHF traders will only enter look to open an order it the risk to reward is 2:1 or more.

If you use a high risk to reward like 2:1, you greatly increase your chances of becoming profitable when trading AUDCHF in the long run.

The Risk-Reward Chart below highlights you how:

Forex Money Management Reward Risk Chart - AUDCHF Trading

In the first examples of Risk-:-Reward Ratio, you can see that even if your AUDCHF system only won 50% of your open AUDCHF trades, you would still make a profit of $10,000. Interpret more on this course: Here Money Management Rules and Forex Trading Equity Management Methods.

Before opening a new AUDCHF trade, a trader should define the point at which he will close the open AUDCHF trade if it turns to be a losing one. Some traders use Forex Trading Fibo Retracement Levels and support and resistance zones. Others just use a pre-determined stop loss to set stop loss order once they have opened a AUDCHF trade.

6. Write down the systems AUDCHF rules & follow them

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

The keyword is A SET OF AUDCHF TRADING RULES which you must follow. If you don't follow the AUDCHF currency pair trading rules then you don't even have a trading system in the first place.

The next trading systems lesson highlights to you an example of how to utilize the above steps to create your own AUDCHF online trading system:

Next Tutorial: Example of Writing AUDCHF Systems Rules

7. Practice on a AUDCHF Demo Practice Account

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

Once you have your AUDCHF system rules written, it's time to test & improve your AUDCHF trade system by using it on a AUDCHF practice account.

Open a free demo practice account & trade AUDCHF your system to see how well it will respond.

It is strongly recommended to begin with a practice account & practice for at least for 1 or 2 months so as to gain some practice & experience how the AUDCHF currency pair works.

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