Making a EURAUD Indicator Based EURAUD Forex System

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

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

• RSI
• MACD
• MAs Indicator

Example

Creating a EURAUD Forex System - EURAUD Forex System Example

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

Seven steps to creating an indicator based EURAUD Forex system

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

1. Choose your EURAUD Time Frame

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

EURAUD Chart Time Frames in MetaTrader 4 - EURAUD MT4 Chart

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

2. Choose indicators to identify a new trend

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

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

MA Crossover Technique - EURAUD System

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

3. Choose additional indicators to confirm the EURAUD market trend

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

To confirm the signals we use RSI & Stochastic.

RSI & Stochastic Oscillator EURAUD Forex 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 EURAUD trade.

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

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

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

Generating EURAUD Signals

Generating EURAUD 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 Indicator or set a protective stop loss depending on the EURAUD market volatility at any one particular time. Alternatively one can exit when the technical indicators give an opposite signal.

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

5. Calculate risks in each EURAUD trading setup

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

The Risk-Reward Chart below highlights you how:

Forex Money Management Reward Risk Chart - EURAUD Forex Trading

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

Before opening a new EURAUD trade, a trader should define the point at which he will close the open EURAUD 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 EURAUD trade.

6. Write down the systems EURAUD rules & follow them

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

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

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

Next Guide: Example of Writing EURAUD Systems Rules

7. Practice on a EURAUD Practice Demo Account

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

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

Open a free demo practice account & trade EURAUD 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 EURAUD currency pair works.

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