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