Making a NZDJPY Indicator Based NZDJPY System

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

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

• RSI
• MACD
• MAs Trading Indicator

Example

Creating a NZDJPY System - NZDJPY System Trading Example

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

Seven steps to creating an indicator based NZDJPY Forex system

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

1. Choose your NZDJPY Time Frame

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

NZDJPY Chart Time Frames on MT4 - NZDJPY MT4 Chart

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

2. Select indicators to identify a new trend

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

One of the common ways to identify a new NZDJPY 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 NZDJPY setup opportunity at its earliest stage.

Moving Average Crossover Technique - NZDJPY Strategy

NZDJPY Sell signal and NZDJPY Buy signal Generated by Moving Average Crossover Strategy Method

3. Select additional indicators to confirm the NZDJPY market trend

Once we find a new NZDJPY trend we need to use additional indicators that will confirm the NZDJPY 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 NZDJPY 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 NZDJPY trade.

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

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

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

Generating NZDJPY Signals

Generating NZDJPY Trade Signals

For exits, a trader can either set an amount he wants to earn per trade or use technical tools that help to set profit goals like Fib Expansion Indicator or set a protective stop loss depending on the NZDJPY market volatility at any specific time. Alternatively a trader can exit when the indicators give an opposite signal.

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

5. Calculate risks in each NZDJPY trade setup

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

The Risk-Reward Chart below displays you how:

Forex Money Management Reward Risk Chart - NZDJPY Forex Trading

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

Before opening a new NZDJPY trade, a trader should define the point at which he will close the open NZDJPY trade if it turns to be a losing one. Some traders use Forex Trading Fib 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 NZDJPY trade.

6. Write down the systems NZDJPY rules & follow them

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

The keyword is A SET OF NZDJPY TRADING RULES which you must follow. If you do not follow the NZDJPY currency pair trading rules then you don't even have a trading 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 NZDJPY Forex online trading system:

Next Guide: Example of Writing NZDJPY Systems Rules

7. Practice on a NZDJPY Practice Account

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

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

Open a free demo practice account and trade NZDJPY your system to see how well it will respond.

It is 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 NZDJPY currency pair works.

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