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