Developing a CADJPY Indicator Based CADJPY System
A CADJPY System refers to a set of CADJPY rules that you follow to manage your CADJPY trades. These CADJPY rules will determine when you open a CADJPY trade & when you'll exit. A CADJPY trade system is created by combining 2 or more indicators.
For example, the Stochastic Oscillator can be combined with other indicators to form a CADJPY system. For this example stochastics can be combined with the indicators below to come up with the following CADJPY system.
- RSI
- MACD
- MAs Indicator
Example
Creating a CADJPY System - CADJPY System Example
So the question is how can one come up with a CADJPY systems that works and how does one write its rules? Follow the steps below:
Seven steps to creating an indicator based CADJPY system
To come up with these set of rules for CADJPY currency pair we use the following seven steps.
1. Choose your CADJPY Time Frame
This first step depends on the number of hours you as a trader want to set a side to CADJPY trading. Whether you prefer sitting in front of the Desktop computer constantly for several hours analyzing short CADJPY time frames OR you prefer setting up your charts using bigger CADJPY time frames once or twice a day. Choosing a charts time frame will mainly depend on what type of CADJPY currency trader you are.
CADJPY Chart Time Frames on MT4 - CADJPY MT4 Chart
While testing your new CADJPY system you may want to find out about its performance on different CADJPY timeframes & then choose the most accurate & profitable CADJPY timeframe for you.
2. Choose indicators to identify a new trend
The goal of a CADJPY currency trader is to get into the CADJPY trade as early as possible and take maximum advantage of price moves.
One of the common ways to identify a new CADJPY 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 CADJPY setup opportunity at its earliest stage.
MA Crossover Technique - CADJPY Strategy
CADJPY Sell signal and CADJPY Buy signal Generated by Moving Average Crossover Strategy Method
3. Select additional indicators to confirm the CADJPY market trend
Once we find a new CADJPY trend we need to use additional indicators that will confirm the CADJPY 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.
RSI & Stochastic Oscillator CADJPY System
4. Finding entry and exit points
Once indicators are chosen so that one indicator gives the signal and another confirms the signal, it is time to enter a CADJPY trade.
A CADJPY trader should enter as soon as a signal is generated and confirmed after a candlestick closes.
Aggressive CADJPY traders enter a transaction immediately without waiting for the current price bar to close.
Other CADJPY traders wait until the current price bar is closed and then enter the transaction if the CADJPY trade setup has not changed and the signal remains valid. This method is more considerate and prevents additional false entries & whipsaws.
Generating CADJPY Signals
Generating CADJPY 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 Fibo Expansion Indicator or set a protective stop loss depending on the CADJPY market volatility at any particular time. Alternatively one can exit when the indicators give an opposite signal.
When opening a new CADJPY trade transaction it's always important to calculate in advance how much you are willing to lose if the CADJPY transaction goes against you. Although the goal is to come up with the best CADJPY system in world, losses are inevitable & hence being ready to tell where you will give up & cut your losses before beginning a CADJPY trade transaction is very important.
5. Calculate risks in each CADJPY trading setup
In you must calculate your risk for each CADJPY trade. Serious CADJPY traders will only enter look to open an order it the risk:reward ratio is 2:1 or more.
If you use a high risk:reward ratio like 2:1, you greatly increase your chances of becoming profitable when trading CADJPY in the long run.
The Risk-Reward Chart below displays you how:
Forex Money Management Reward Risk Chart - CADJPY Trading
In the first examples of Risk-:-Reward Ratio, you can see that even if your CADJPY system only won 50% of your open CADJPY trades, you would still make a profit of $10,000. Interpret more on this course: Here Money Management Rules and Trade Money Management Methods.
Prior to opening a new CADJPY trade, a trader should define the point at which he will close the open CADJPY trade if it turns to be a losing one. Some traders use Forex Fibo Retracement Levels and support and resistance levels. Others just use a pre-determined stop loss to set stop loss order once they have opened a CADJPY trade transaction.
6. Write down the systems CADJPY rules & follow them
A Trade System refers to a set of CADJPY rules that you follow to manage your CADJPY trades.
The keyword is A SET OF CADJPY TRADING RULES which you must follow. If you don't follow the CADJPY currency pair rules then you don't even have a strategy in the first place.
The next systems lesson portrays to you an example of how to utilize the above steps to come up with your own CADJPY online system:
Next Guide: Example of Writing CADJPY Systems Rules
7. Practice on a CADJPY Demo Account
Without enough CADJPY trades, you will not be able to realize the true profitability of your CADJPY system.
Once you have your CADJPY system rules written, it's time to test & improve your CADJPY trade system by using it on a CADJPY practice account.
Open a free demo practice account and trade CADJPY your system to see how well it will respond.
It's strongly recommended to begin with a practice account and practice for at least for 1 or 2 months so as to gain some practice & experience how the CADJPY currency pair works.
Once you start making some decent profit on your CADJPY demo account you can then try opening a live account & begin trading CADJPY currency pair with real money.
