Stock System Rules: Write Down The Rules and Follow Them

We shall use the previous steps to create a written system that generates the trade signals displayed below using the 1 hour chart. We shall use the 1 H stock index chart to write the guide-lines of this stock strategy - stock index system.

A stock index system refers to a set of written rules that you follow to manage your trades. These rules must be written down so as to guide you. Following learn tutorial will show you how to writedown the rules of your system.

Keyword is a SET OF RULES which you must follow. If you do not follow the rules then you don't have a system. trading systems must have guidelines which are written down within your plan.

Example of Stock System below:

Writing Rules of a Stock System- 1 hour Chart Time frame Trading

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

Choose your Chart Timeframe - 1 hour chart

Choose Indicators which spot a new trend - MA Cross Over System.

Choose Indicators that confirm the trend - RSI, Stochastic

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

Calculating risks in each trade - 20 pips

Write down the trade system Stock Indices rules

Test the stock system on a practice account

After using these steps we create written stock index system rules below.

Writing Stock System Rules

Example of How to Write the Best Stock System Rules

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

Generate Buy & Sell Stock Signals using Written Stock System Rules

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