Stocks System Rules: Write Down The Rules and Follow Them

We shall use the previous steps to come up with a written system that generates the trade signals displayed below using the 1 hour chart. We shall use the 1 hour chart to write the rules of this strategy - trading system.

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

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

Example of System below:

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

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

Choose your Chart Timeframe - 1 hour trading chart

Choose Indicators which spot a new trend - Moving Average Cross-over System.

Choose Indicators that confirm the trend - RSI, Stochastic

Finding entry & exit points

Long Entry

1. Both Moving Average pointing up
2. RSI above 50
3. Stochastic oscillator going up

Short Entry

1. Both Moving Average 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 Stocks rules

Test the system on a practice account

After using these steps we create written system rules below.

Writing System Rules

Examples of How to Write The Best 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 Signals using Written System Rules

We have completed writing the rules, if you are researching on how to create the best 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 plan. Now how do i create a complete stock plan? To read about Stocks plan tutorial go to the right navigation menu of this website under Stocks key concepts where you can find a link for this trade plan topic.