Creating a XAUEUR Indicator Based XAUEUR System

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

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

• RSI
• MACD
• MAs Indicator

Example

Creating a XAUEUR System - XAUEUR System Trading Example

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

Seven steps to creating an indicator-based XAUEUR system

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

1. Choose your XAUEUR Time Frame

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

XAUEUR Chart Time Frames on MT4 - XAUEUR MT4 Chart

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

2. Select indicators to spot a new trend

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

One of the common ways to identify a new XAUEUR trend as fast as possible is to use Moving Averages Indicator. A simple strategy is to use a Moving Average cross over system that will identify a new XAUEUR setup opportunity at its earliest stage.

Moving Average Crossover Strategy Method - XAUEUR Strategy

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

3. Select additional indicators to confirm the XAUEUR market trend

Once we find a new XAUEUR trend we need to use additional indicators that will confirm the XAUEUR 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 Oscillator XAUEUR System

4. Finding entry & exit points

Once indicators are chosen so that one indicator gives the signal & another confirms the signal, it's time to enter a XAUEUR trade.

A XAUEUR trader should enter as soon as a signal gets generated and confirmed after a candlestick closes.

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

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

Generating XAUEUR Signals

Generating Forex XAUEUR 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 XAUEUR market volatility at any given time. Alternatively a trader can exit when the indicators give an opposite signal.

When opening a new XAUEUR trade transaction it's always important to calculate in advance how much you're willing to lose if the XAUEUR transaction goes against you. Although the aim is to develop the best XAUEUR system in globe, losses are inevitable and therefore being ready to tell where you'll give up and cut your losses before beginning a XAUEUR trade is very important.

5. Calculate risks in each XAUEUR trading setup

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

The Risk to Reward Chart below shows you how:

Forex Money Management Reward Risk Chart - XAUEUR Trading

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

Before opening a new XAUEUR trade, a trader should define the point at which he will close the open XAUEUR 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 XAUEUR trade.

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

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

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

The next systems lesson portrays to you an example of how to utilize the above steps to develop your own XAUEUR online system:

Next Guide: Example of Writing Forex XAUEUR Systems Rules

7. Practice on a XAUEUR Demo Practice Account

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

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

Open a free practice practice account and trade XAUEUR 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 XAUEUR currency pair works.

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