Developing Basics Systems That Works - Trading System Example Templates
When making your own Basics Systems, there are a few factors to keep in mind. Your strategy needs to have the ability to identify new market trends, while at the same time making sure you do not to get faked out/whipsaws. The real trick is, once you have come up with a system which works for you, stick to it. Being disciplined will help you a lot in becoming successful.
Before FX on a live trading account, you have to figure out what Basics Systems & strategies work for you. It is good to know in what time frame you're going to be working in, and how much you're willing to risk once you begin. All these should be factored in, & should be written within your trading plan. A good place to test this would be on a free demo trading account. This is where you test your strategies risk-free without investing money to determine which strategy is best suited for you.
So, now how can one like you come up with a "good Basics Systems" or "best Basics Systems "?
To come up with a good trading strategy the first thing to do is to define your main objective or goal:
The following example illustrates a goal & explains the rules of how to achieve that goal for your Basics System.
Goals
1. Identify a new trend
Moving average cross-over method is the most oftenly strategy used to identify a new trend. Time to open a long or short trade is determined when two averages cross over or cross under each other.
2. Confirm the new trend
Relative Strength Index(RSI) and Stochastic Oscillator are the most oftenly used indicators to confirm a trend.
Indicator-based Basics Strategies
The best type of a method is one that's indicator-based. You will find it straight forward to generate the signals & thus less error-prone on your part and this will help you to avoid market whipsaws.
There are several things we want to achieve when creating Basics Systems:
- Find entry points as early as possible.
- Find exit points securing maximum gains.
- Avoid fake entry & exit signals.
- Proper Money Management Rules
Accomplishing these four goals will result in a profitable Basics System and a strategy that works.
The last piece of info needed, is deciding how aggressive you're going to be when entering and exiting a trade. Those who more aggressive wouldn't wait until the chart candlestick closes & would enter as soon as their indicators match up. But most would wait until the chart candle of the timeframe they are using has closed, to have more stable signal when entering the market.
To get huge profits out of the market you as a trader need to build your own profitable trading system; a method that will bring your not just hundreds but thousands of dollars worth of revenues. You need to have your own strategy which will help you achieve your financial goals. Sometimes the best trading systems are the ones that you build on your own. No need to keep looking for best systems or for systems which work, this web site provides you with all the tools required to help you & guide you on how to come up with your own systems.
Shown Below is example of a Basics Systems based on RSI, MACD & Stochastic.
Forex System - Basics Strategies
The Basics Systems example above is comprised of four indicators in total, all of these generate trade signals using different methods, the Moving Average will generate signals using the crossover method shown, the RSI, Stochastic and MACD use different analysis to generate the long & short signals as shown in the above example. How to generate these signals is discussed in the next lesson (on the sidebar navigation learn lessons menu under key concepts).
For beginners who want to create Basics Systems, it's difficult for them to device their own Forex strategies since they don't have a lot of knowledge about the trading market. However, this website will explain how one-can create their own free system in just 7 easy guide-lines. Best strategy is one you come up with yourself & learn how to trade the market with it.
Main advantage of creating your own free Basics Systems is that you will know how to make profits by yourself-and not rely on other peoples efforts.
In the next course located at the sidebar navigation learn courses menu below the key concepts will show you how to create a system like that one above, write it's rules & how to back test it on a practice demo trading account before using it on live trading account.
4 Examples of Free Basics Strategies
Examples 1: The MA Crossover Technique - Basics Strategies
The cross over method uses two moving averages to generate signals. The first MA uses a shorter period and the second is a longer period.
Crossover Technique - Basics Strategies
This above method is referred to as the moving average cross over technique because trading signals are generated when two averages cross above or below each other.
Forex System Example - Short and Long signal Generated - Basics Strategies
A buy signal or going long trade is generated when the shorter average crosses above the longer average (Both MAs Going Up).
A sell signal or a going short trade is generated when the shorter average crosses below the longer average (Both Moving Averages Going Down).
Example 2: Stochastics System - Basics Strategies
Stochastic Oscillator can be combined with other indicators to form a system.
- RSI
- MACD
- Moving Averages Indicator
Trading Strategies Example - Basics Strategies
Short Signal or Sell Signal - Basics Strategies
How the short signal was generated
From our rules the short signal gets generated when:
- Both Moving Averages are heading down
- RSI is below 50
- Stochastic moving downward
- MACD heading downward below centerline
Short signal was generated when all the written rules were met. Exit trading signal gets generated when a signal in opposite direction is generated.
Good thing about using such a method is that we are using different types of indicators to confirm the signals and avoid as many whipsaws as possible in the process.
- Stochastic - momentum oscillator
- RSI - momentum oscillator
- Moving Averages Indicator - trend following indicator
- MACD - trend following indicator
Based on the chart time frame used this strategy can be used as scalping system when the min charts are used or as a day trading system when hourly charts are used.
Example 3: System Example - Basics Strategies
This system is fully described within the trading plan on the trading plan tutorial on this web site under the key concepts section located on the right navigation menu.
Chart Timeframe
1 hour chart
Trading Indicators which spot a new trend
Moving Average Crossover
Indicators that confirm the market trend
RSI
STOCHASTIC OSCILLATOR
Long Entry - Buy Signal
1. Both MA(moving averages) pointing upwards
2. RSI above 50
3. Both stochastic oscillators heading up
Short Entry - Sell Signal
1. Both Moving Average pointing down
2. RSI below 50
3. Both stochastic oscillators heading down
Exit Signal
1. MA gives opposite signal
2. RSI gives opposite signal
Risk Management in FX Trading
StopLoss - 35 pips
Take Profit - 70 pips
Reward to Risk 2:1
Example 4: New Gann Swing Chartist Plan - Basics Strategies
The Gann Swing Oscillator is meant to be used in combination with the Gann HiLo Activator & Gann Trend to form a complete strategy commonly referred to as the - 'New Gann Swing Chartist Plan'. Within this methodology the Gann Swing Oscillator is used to help determine market swings for trading only within the current market trend is shown by Gann Trend.
Shown Below is examples of New Gann Swing Chartist Plan
The Gann Chartist Plan - Basics Strategies
