Developing a USDNOK Indicator Based USDNOK System

A USDNOK System refers to a set of USDNOK trading rules that you follow to manage your USDNOK trades. These USDNOK trading rules will determine when you open a USDNOK trade & when you'll exit. A USDNOK 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 USDNOK trading system. For this example stochastics can be combined with the indicators below to come up with the following USDNOK trading system.

• RSI
• MACD
• MAs Indicator

Example

Creating a USDNOK System - USDNOK System Example

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

Seven steps to creating an indicator based USDNOK system

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

1. Choose your USDNOK Time Frame

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

USDNOK Chart Time Frames in MetaTrader 4 - USDNOK MT4 Chart

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

2. Choose indicators to identify a new trend

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

One of the common ways to spot a new USDNOK 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 USDNOK trading setup opportunity at its earliest stage.

MA Crossover Technique - USDNOK Strategy

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

3. Choose additional indicators to confirm the USDNOK market trend

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

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

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

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

Generating USDNOK Signals

Generating USDNOK 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 USDNOK market volatility at any particular time. Alternatively one can exit when the indicators give an opposite signal.

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

5. Calculate risks in each USDNOK trading setup

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

The Risk-Reward Chart below portrays you how:

Forex Money Management Reward Risk Chart - USDNOK Trading

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

Prior to opening a new USDNOK trade, a trader should define the point at which he will close the open USDNOK trade if it turns to be a losing one. Some traders use FX Trading 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 USDNOK trade transaction.

6. Write down the systems USDNOK trading rules & follow them

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

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

The next systems lesson portrays to you an example of how to use the above steps to come up with your own USDNOK online trading system:

Next Guide: Example of Writing USDNOK Trading Systems Rules

7. Practice on a USDNOK Demo Account

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

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

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

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