Creating a 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 don't to get faked out/whipsaws. Real trick is, once you have created a system that works for you, stick to it. Being disciplined will help you a lot in becoming successful in stocks.
Before Stocks on a live account, you've to figure-out what stocks strategy works for you. It is good to know in what chart timeframe you're going to be working in, and how much you are willing to risk once you begin stocks online. All these factors should be factored in, & should be written down within your stock plan. A good place to test this stocks plan would be on a free practice 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 one like you come up with a "good stocks system" or the "best stock system"?
To come up with a good stocks strategy the first thing to do is to define your main aim or goal:
The following example illustrates a goal & explains the stocks guide-lines of how to achieve that goal
Stocks Goals
1.Identify a new trend
Moving average crossover method strategy is the most commonly used strategy to identify a new stock trend. The 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 trend
Relative Strength Index(RSI) Indicator & Stochastic Oscillator Indicator are the most commonly used technical indicators to confirm a trend.
Indicator based Stocks System
The best type of a method is one that is indicator-based. You will find it straight forward to generate the signals & 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 and exit signals.
- Proper Money Management Rules
Finishing these 4 goals will result in a profitable strategy that works.
The last piece of info needed, is deciding how aggressive you're going to be when entering and exiting a trade. Those traders who are more aggressive wouldn't wait until the chart candle closes and would enter as soon as their indicators match up. But most traders would wait until the stocks chart candle of the chart timeframe they are using has closed, to have more stability when entering a the market.
To get profits out of the market you need to build your own profitable stocks system: a method that will generate profitable stocks signals. You need to have your own stocks strategy which 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 systems or for stock systems which work, this website provides you with all the tools required to help you & guide you on how to come up with your own stock systems.
Below is example of a trade system based on RSI, MACD & Stochastic.
Stocks System - Best MT4 Templates Stocks Systems
The stocks system example above is comprised of four technical indicators in total, all of these generate trade signals using different techniques, the moving average will generate stocks signals using the moving average crossover method shown, the RSI indicator, Stochastic indicator & MACD indicator use different technical analysis to generate the long & short signals as shown in the above example. How to generate these Stocks signals is discussed in the next topic (on the sidebar navigation learn tutorials menu under key concepts).
For new traders, it's difficult for them to create their own trading strategies since they don't have a lot of knowledge about the market. However, this learn stocks site will explain how a starter trader can create their own free system in just seven easy steps. The best strategy is one you create yourself and learn how to trade the 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 system like the one above, write it's stocks rules & how to back-test the system on a practice demo account before using it on a live account.
4 Examples of Free Stock Systems
Example 1: The MA Crossover Strategy
The moving average indicator cross over method uses two moving averages to generate Stocks signals. The first Moving average uses a shorter period & the second is a longer period.
MA Crossover Technique - MA Crossover Stocks Strategy
This above stocks method is referred to as the moving average crossover method because signals are generated when two averages cross above or below each other.
Stocks System Example - Short & Long signal Generated by Stocks System
A buy signal or going long trade is generated when shorter moving average indicator crosses above longer moving average technical indicator (Both Moving Averages Moving Up).
A sell signal or a going short trade is generated when shorter average indicator crosses below the longer moving average technical indicator (Both Moving Averages Moving Down).
Example 2: Stochastics Stocks System
Stochastic Oscillator technical indicator can be combined with other trading indicators to form a system.
- RSI stocks indicator
- MACD stocks indicator
- Moving Averages trade indicators
Trading Strategies Examples - Best MT4 Templates Stocks Systems
Short Signal or Sell Signal
How the short sell signal was generated
From our stocks guide-lines the short signal is generated when:
- Both Moving Averages are heading down
- RSI is below 50
- Stochastic moving downward
- MACD moving downward below center-line
Short trading signal was generated when all the written stocks rules were met. Exit signal is generated when a signal in opposite direction is generated.
Good thing about using such a method is that we are using different types of indicators to confirm the signals and avoid as many whipsaws as possible in the process.
- Stochastic - stocks momentum oscillator
- RSI - stocks momentum oscillator
- Moving Averages Stock TradingIndicator - trend following indicator
- MACD - trend following oscillator
Based on the chart timeframe used - this strategy can be used as Stocks scalping system when the minute trading charts are used or as a Stocks day stocks system when hourly charts are used.
Example 3: Trading System Example
This system is fully explained within the trade plan on the trade plan lesson on this learn stocks web site under the Trading key concepts section located on right navigation menu.
Chart Timeframe
1 hour stocks chart
Indicators that identify a new trend
MA Crossover Technical Indicators Strategy
Indicators that confirm the trend
RSI indicator
STOCHASTIC OSCILLATOR 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 MA pointing down
2. RSI below 50
3. Both stochastics going down
Exit Signal
1. Moving Average Indicator gives opposite signal
2. RSI gives opposite signal
Risk Management in Stock Trading
Stop Loss - 35 pips
Take Profit Order - 70 pips
Reward to Risk 2:1
Example 4: New Gann Swing 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 Stocks strategy commonly referred to as the - 'New Gann Swing Chartist Plan'. Within this methodology the Gann Swing Oscillator is used to help determine stocks market swings for trading only within the current market trend is shown by the Gann Trend.
Below is example of the New Gann Swing Chartist Plan
Gann Chartist Plan - Systems - MT4 Template Stocks System
What's a Trading Plan? - Written Plan Example Template
Alternatives: Automated Expert Advisors Robots or Copy Paste Signals
