Making a AUDUSD Indicator Based AUDUSD System

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

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

• RSI
• MACD
• MAs Technical Indicator

Example

Creating a AUDUSD System - AUDUSD System Example

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

Seven steps to creating an indicator-based AUDUSD Forex system

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

1. Choose your AUDUSD Timeframe

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

AUDUSD Chart Time Frames on MT4 - AUDUSD MT4 Chart

While testing your new AUDUSD Forex system you may want to find out about its performance on different AUDUSD timeframes and then choose the most accurate & profitable AUDUSD timeframe for you.

2. Select trading indicators to spot a new market trend

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

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

MA Crossover Strategy - AUDUSD System

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

3. Choose additional indicators to confirm the AUDUSD market trend

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

To confirm the signals we use RSI & Stochastic.

RSI & Stochastic Oscillator Technical AUDUSD System

4. Finding entry and exit points

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

A AUDUSD Forex trader should enter as soon as a signal is generated and confirmed after a candlestick closes.

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

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

Generating AUDUSD Signals

Generating AUDUSD Trade Signals

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

When opening a new AUDUSD trade transaction it's always important to calculate in advance how much you're willing to lose if the AUDUSD transaction goes against you. Although the goal is to develop the best AUDUSD Forex system in globe, losses are inevitable & hence being ready to tell where you will give up and cut your losses before starting a AUDUSD trade is very important.

5. Calculate risks in each AUDUSD trading setup

In you must calculate your risk for each AUDUSD trade. Serious AUDUSD 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 AUDUSD in the long run.

The Risk to Reward Chart below shows you how:

Forex Money Management Reward Risk Chart - AUDUSD Forex Trading

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

Prior to opening a new AUDUSD trade, a fx trader should define the point at which he will close the open AUDUSD trade if it turns to be a losing one. Some traders use FX Fib Retracement Levels and support & resistance zones. Others just use a pre-determined stop loss to set stop loss order once they have opened a AUDUSD trade transaction.

6. Write down the systems AUDUSD rules & follow them

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

The keyword is A SET OF AUDUSD TRADING RULES that you must follow. If you do not follow the AUDUSD currency pair rules then you do not even have a system strategy in the first place.

The next systems lesson highlights to you an example of how to utilize the above steps to develop your own AUDUSD Forex online system:

Next Guide: Example of Writing AUDUSD Systems Rules

7. Practice on a AUDUSD Practice Demo Trading Account

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

Once you have your AUDUSD Forex system rules written, it is time to test & improve your AUDUSD trade system by using it on a AUDUSD practice account.

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

It's 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 AUDUSD currency pair works.

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

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