Creating a Commodities Trading System That Works
When creating your own commodities trading system, there are a few things to keep in mind. Your commodity strategy needs to be able to identify new Commodities market trends, while at the same time making sure you do not to get faked out - commodity whipsaws. The real trick is, once you have created a commodities system that works for you, stick to it. Being disciplined will help you a lot in becoming successful in commodity.
Before trading Commodity Trading on a live commodities trading account, you have to figure out what commodity strategy works for you. It is good to know in what chart timeframe you are going to be working in, and how much you are willing to risk once you begin commodity. All these factors should be factored in, and should be written down within your commodities trading plan. A good place to test this commodity plan would be on a free practice trading account. This is where you test your commodity 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 commodity system" or the "best commodities trading system"?
To come up with the best commodity strategy the first thing to do is to define your commodity objective or goal:
The following examples shows a goal and explains the commodity rules of how to achieve that goal
Goals of Commodity Trading System
1.Identify a new commodity trend
Moving average crossover strategy commodity strategy is the most commonly used strategy to identify a new commodities 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 commodity trend
Relative Strength Index(RSI) Indicator and Stochastic Oscillator Indicator are the most commonly used technical indicators to confirm a Commodities trend.
Indicator based Trading System
The best type of a commodity strategy is one that is indicator-based. You will find it straight forward to generate the commodity 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 Commodities Trading Money Management Rules
Finishing these four goals will result in a profitable commodities 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 commodities chart candle stick closes and would enter as soon as their technical indicators match up. But most traders would wait until the commodity chart candlestick of the chart timeframe they are using has closed, to have more stability when entering a the commodities market.
To get profits out of the commodity market you need to build your own profitable commodity system: a trading strategy that will generate profitable commodity signals. You need to have your own commodity 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 commodities trading systems or for commodities systems which work, this website provides you with all the commodity tools required to help you & guide you on how to come up with your own commodities trading systems.
Below is example of a Commodities trade system based on RSI, MACD and Stochastic.
Commodity System - Commodities MT4 Chart Templates Commodity Trading Systems
The commodity system example above is comprised of four technical indicators in total, all of these generate Commodities trade signals using different strategies, the moving average will generate commodity 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 tutorials menu under key concepts).
For beginner traders, it's difficult for them to create their own commodities trading strategies since they do not have much knowledge about the commodities market. However, this learn commodity site will explain how a beginner commodity trader can create their own free commodities system in just seven easy steps. Best strategy is the one you come up with yourself and learn how to trade the commodity market with it.
The main advantage of creating your own free commodities 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 commodity key concepts will show you how to create a commodity system like the one above, write it's commodity rules and how to back-test the commodity system on a practice demo commodity account before using it on a live commodities trading account.
4 Examples of Free Commodity Trading Systems
Example 1: The Moving Average Crossover Strategy
The moving average indicator cross over strategy uses two moving averages to generate commodities trading signals. The first Moving average uses a shorter period & the second is a longer period.
Moving Average Crossover Commodity Trading Technique - Moving Average Crossover Strategy
This above commodity strategy is referred to as the moving average cross over strategy because commodity trading signals are generated when two averages cross above or below each other.
Commodity Trading System Template Example - Short and Long trading signal Generated by Trading System
A buy commodity signal or going long trade is generated when shorter moving average indicator crosses above longer moving average indicator (Both Moving Averages Moving Up).
A sell commodity signal or a going short trade is generated when shorter average indicator crosses below the longer moving average indicator (Both Moving Averages Moving Down).
Example 2: Stochastics Commodities Trading System
Stochastic Oscillator technical indicator can be combined with other indicators to form a commodity system.
- RSI technical indicator
- MACD technical indicator
- Moving Averages commodities technical indicators
Trading Systems Example - Commodities MT4 Chart Templates Commodity Trading Systems
Short Signal or Sell Trading Signal
How the short sell Commodity signal was generated
From our commodity rules the short signal is generated when:
- Both Moving Averages are heading down
- RSI is below 50
- Stochastic moving downward
- MACD moving downward below centerline
Short trading signal was generated when all the written commodity rules were met. Exit signal is generated when a commodity signal in opposite direction is generated.
Good thing about using such a commodity strategy is that we are using different types of technical indicators to confirm the commodity signals and avoid as many commodity whip-saws as possible in process.
- Stochastic - commodity momentum oscillator indicator
- RSI - commodity momentum oscillator indicator
- Moving Averages Commodities TradingTechnical Indicator - commodity trend following indicator
- MACD - commodity trend following oscillator
Based on the chart time frame used - this strategy can be used as Commodities scalping system when the minute commodity charts are used or as a Commodities day commodity system when hourly commodity charts are used.
Example 3: Trading System Commodity Example
This system is fully explained within the commodities trading plan on the commodities trading plan lesson on this learn commodity web site under the key concepts section located on the right navigation menu.
Chart Time-frame
1 hour chart
Indicators that identify a new commodity trend
Moving Average Crossover Technical Indicators Strategy
Trading Indicators which confirm the commodity 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 MA pointing down
2. RSI below 50
3. Both stochastics going down
Exit Signal
1. MA Technical Indicator gives opposite trading signal
2. RSI gives opposite signal
Risk Management in Commodities Trading
Stop loss- 35 pips
Take Profit Commodity Order - 70 pips
Risk-Reward 2:1
Example 4: New Gann Swing Commodity 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 commodities trading strategy oftenly referred to as the - "New Gann Swing Chartist Plan". Within this commodity strategy the Gann Swing Oscillator is used to help determine commodity market swings for trading only within the current commodity trend is illustrated by the Gann Trend.
Below is the example of New Gann Swing Chartist Plan
The Gann Chartist Plan - Commodity Systems - Commodities MT4 Chart Template Trading System
