Trading System Rules: Write Down The Rules of Your Forex System & Follow Them

We shall use the previous steps to create a written forex trading system that generates the trade signals shown below using the 1 hour chart. We shall use the 1 hour forex chart to write the rules of this trading strategy.

A trading system refers to a set of written trading rules that you follow to manage your trades when trading in the market. These forex trading rules must be written down so as to guide you. The following tutorial will show you how to writedown the rules of your trading system.

The keyword is a SET OF RULES which you must follow. If you don't follow the rules then you don't have a trading system. Trading systems must have rules which are written down within your trading plan.

Example of Trading System below:

Writing Rules of a Forex System - 1 hour Chart Timeframe System Example Template

You can come up with the above Forex system using the steps below:

Step 1:

Choose your Chart Timeframe - 1 hour chart

Step 2:

Choose Indicators which spot a new trend - MA Crossover System.

Step 3:

Select Indicators which confirm the forex trend - RSI, Stochastic

Step 4:

Finding entry & exit points

Long Entry

1. Both MA pointing up
2. RSI above 50
3. Stochastic oscillator going up

Short Entry

1. Both MA pointing down
2. RSI below 50
3. Stochastic oscillator going down

Exit

1. MA gives opposite signal
2. RSI gives opposite signal

Step 5:

Calculating risks in each trade - 20 pips

Step 6:

Write down the forex trade system rules

Step 7:

Test the system on a practice trading account

After using these steps we come up with the written trading system rules below.

Writing Trading System Rules

Example of How to Write Trading System Rules - Writing Trading Systems Rules

This trading system produces the forex signals as shown below. Using these rules traders can determine when to enter and exit trades.

How to Generate Buy & Sell Signals using Written System Rules

We have completed writing the rules, if you are researching on how to create the best forex system, this tutorial is a good start to guide you on how to do just that. This is one part of a the trading plan. Now how do you create a complete trading plan? - To read about how to create a forex trading plan go to the right navigation menu of this website under key concepts where you can find a link for this trade plan tutorial topic.