Creating a Stocks System That Works
When creating your own stock system, there are a few things to keep in mind. Your stocks strategy needs to be able to identify new Stocks market trends, while at the same time making sure you do not to get faked out - stocks whipsaws. The real trick is, once you've created a stock system that works for you, stick to it. Being disciplined will help you a lot in becoming successful in stocks.
Before trading Stocks on a live stock trading account, you've to figure out what stocks strategy works for you. It's good to know in what chart time-frame you're going to be working in, & how much you are willing to risk once you begin stocks. All these factors should be factored in, and should be written down within your stock trading plan. A good place to test this stocks plan would be on a free practice trading account. This is where you test your stocks strategies risk free without investing money to determine which strategy is best suited for you.
So, now how can a trader like you create a "good stocks system" or the "best stock trading system"?
To come up with the best stocks strategy the first thing to do is to define your stocks objective or goal:
The following examples shows a goal & explains the stocks rules of how to achieve that goal
Goals of Stocks System
1.Identify a new stocks trend
Moving average crossover strategy stocks strategy is the most commonly used strategy to identify a new stock trend. Time to open a long or short trade is decided when two moving averages indicators cross over or cross under each other.
2.Confirm the new stocks trend
Relative Strength Index(RSI) Indicator and Stochastic Oscillator Indicator are the most commonly used technical indicators to confirm a Stocks trend.
Indicator based Stocks System
The best type of a stocks strategy is one that is indicator-based. You will find it straight forward to generate the stocks signals and thus less error-prone on your part and this will help you to avoid market whipsaws.
There are several things we want to achieve when creating a system:
- Find entry points as early as possible.
- Find exit points securing maximum gains.
- Avoid fake entry & exit signals.
- Proper Money Management Rules
Finishing these 4 goals will result in a profitable stock trading strategy that works.
The last piece of information needed, is deciding how aggressive you're going to be when entering & exiting a trade. Those traders who are more aggressive wouldn't wait until the stock chart candlestick closes and would enter as soon as their technical indicators match up. But most traders would wait until the stocks chart candlestick of the chart timeframe they are using has closed, to have more stability when entering a the stocks market.
To get profits out of the stocks market you need to build your own profitable stocks system: a strategy that will generate profitable stocks signals. You need to have your own stocks strategy that will help you achieve your financial goals. Sometimes the best trading systems are the ones that you build on your own. No need to keep searching online for best stock trading systems or for stock systems which work, this website provides you with all the stocks tools required to help you & guide you on how to come up with your own stock trading systems.
Shown Below is example of a Stocks trade system based on RSI, MACD & Stochastic.
Stocks System - Stock MT4 Chart Templates Stocks Systems
The stocks system example above is comprised of four technical indicators in total, all of these generate Stocks trade signals using different strategies, the moving average will generate stocks signals using the moving average crossover strategy shown, the RSI indicator, Stochastic indicator and MACD indicator use different technical analysis to generate the long and short signals as shown in the above example. How to generate these trading signals is discussed in the next topic (on the sidebar navigation learn lessons menu under key concepts).
For beginner traders, it is difficult for them to create their own stock trading strategies since they do not have a lot of knowledge about the stock market. However, this learn stocks site will explain how a beginner trader can create their own free stock trading system in just seven easy steps. The best strategy is one you come up with yourself & learn how to trade the stocks market with it.
The main advantage of creating your own free stock systems is that you will know how to make profits by yourself - & not rely on other peoples efforts.
In the next lesson located at the sidebar navigation learn courses menu below the stocks key concepts will show you how to create a stocks system like the one above, write it's stocks rules and how to backtest the stocks system on a practice practice stocks account before using it on a live stock trading account.
4 Examples of Free Stock Systems
Example 1: The Moving Average Crossover Stocks Strategy
The moving average indicator cross over strategy uses two moving averages to generate stock trading signals. First Moving average uses a shorter period & the second is a longer period.
Moving Average Crossover Stocks Method - Moving Average Crossover Stocks Strategy
This above stocks strategy is referred to as the moving average cross-over strategy because stock signals get generated when the two averages cross above or below each other.
Stocks System Examples - Short and Long signal Generated by Stocks System
A buy signal or going long trade is generated when shorter moving average indicator crosses above the longer moving average indicator (Both Moving Averages Moving Up).
A sell signal or a going short trade is generated when shorter average indicator crosses below longer moving average indicator (Both Moving Averages Going Down).
Example 2: Stochastics Stock System
Stochastic Oscillator technical indicator can be combined with other indicators to form a stocks system.
- RSI indicator
- MACD indicator
- Moving Averages stocks indicators
Trading Systems Example - Stock MT4 Chart Templates Stocks Systems
Short Signal or Sell Stocks Signal
How the short sell Stocks signal was generated
From our stocks rules the short signal is generated when:
- Both Moving Averages are heading down
- RSI is below 50
- Stochastic heading downwards
- MACD moving downward below centerline
The short trading signal was generated when all the written stocks rules were met. Exit trading signal is generated when a stocks signal in the opposite direction is generated.
Good thing about using such a stocks strategy is that we are using different types of technical indicators to confirm the stocks signals & avoid as many stocks whip-saws as possible in process.
- Stochastic - stocks momentum oscillator indicator
- RSI - stocks momentum oscillator indicator
- Moving Averages Stock TradingTrading Indicator - stocks trend following indicator
- MACD - stocks trend following oscillator
Based on the chart time frame used - this strategy can be used as Stocks scalping system when the minute charts are used or as a Stocks day stocks system when hourly charts are used.
Example 3: Trading System Stock Example
This system is fully explained within the stock trading plan on the stock trading plan lesson on this learn stocks web site under the key concepts section located on the right navigation menu.
Chart Timeframe
1 hour chart
Indicators that identify a new stocks trend
Moving Average Crossover Technical Indicators Strategy
Indicators which confirm the stocks trend
RSI indicator
STOCHASTIC OSCILLATOR technical indicator
Long Entry - Buy Signal
1. Both MA(moving averages) pointing up
2. RSI above 50
3. Both stochastics going up
Short Entry - Sell Signal
1. Both Moving Average pointing down
2. RSI below 50
3. Both stochastics going down
Exit Signal
1. Moving Average Technical Indicator gives opposite signal
2. RSI gives opposite signal
Risk Management in Stock Trading
Stop loss- 35 pips
Take Profit Stocks Order - 70 pips
Risk to Reward 2:1
Example 4: New Gann Swing Stocks Trading Chartist Plan
The Gann Swing Oscillator is meant to be used in combination with the Gann HiLo Activator & Gann Trend to form a complete stock strategy oftenly referred to as the - "New Gann Swing Chartist Plan". Within this stocks strategy the Gann Swing Oscillator is used to help determine stocks market swings for trading only within the current stocks trend is illustrated by the Gann Trend.
Shown Below is examples of New Gann Swing Chartist Plan
The Gann Chartist Plan - Stocks Systems - Stock MT4 Chart Template Stocks System
