How to Generate Commodity Trading Signals With Commodity Trading Strategies

Generating Commodity MT4 Free Signals

The only method of commodity is through trading signals, It is best to learn how to generate these commodity signals for yourself, this way you do not have to rely on other traders to generate them for you.

Generating commodities trading signals isn't easy & requires you to have a lot of technical analysis trading knowledge and experience, but the earlier you begin practicing how to generate these commodity signals for yourself the better it's for you.

A good technique of how to practice generating commodities trading signals with trading systems is to open a free practice Commodity demo account & test your commodity signals on this practice account risk free without risking your money, then once you have tested your commodity strategies and they are profitable on the commodity practice account you can the use these commodity signals on a live trading account.

The method of how to practice generating these commodity signals as well as how to back test the commodity signals on the demo account using the Meta Trader 4 trading platform is discussed below:

So, How Can a Trader Generate Trade Signals?

The best technique of generating signals is through trading systems, You can Learn how to come up with trading systems from the lesson how to create Trading Systems on the right navigation menu under the topics Commodities Trading Key Concepts.

A commodities system is a combination of one or two or more technical indicators with written commodity guidelines of how these indicators will generate these trading signals.

Take an example of the simplest commodity system or commodity strategy known as moving average cross-over commodity method. A buy signal or sell signal is generated when there is a cross-over of the 2 moving averages: either a buy signal for an upward moving average cross-over or a sell signal for down-wards trend.

Generating Commodity MetaTrader 4 Free Signals - Signals MT4 Indicator Strategy MA Crossover Strategy Method

The commodity system example portrayed & described below highlights a commodities trading system using the above moving average strategy combined with the RSI and MACD indicators to generate buy & sell trades.

Example of Generating Commodity MetaTrader 4 Free Signals - Signals MT4 Indicator Strategy Method

When it comes to generating buy & sell signals, traders should use simple commodity systems to generate these trading signals.

Generating Commodity MetaTrader 4 Free Signals - Signals MT4 Indicator Strategy - Buy & Sell Trading Signals

Trading Strategies

An example of a simple trading system that works, is one that's a combination of:

• Moving average crossover strategy
• RSI
• MACD

The written commodity rules are:

Generating Signals Strategy System Examples

Trade Rules:

Buy Trading Signal gets Generated when:

• Both Moving averages going up
• RSI value above 50
• MACD above center line

Sell Commodity Trading Signal gets Generated when:

• Both Moving averages going down
• RSI value below 50
• MACD below centerline

Generating Buy & Sell Trades - Examples of a Strategy

Exit Trade Signal

Exit trading signal is generated when MA, RSI & MACD indicator give a signal in opposite direction.

The chart time frame to use is 1 hour chart time frame or 15 minutes chart time frame depending on what type of trader you are.

For a beginner commodity trader the above written commodity rules will give good buy & sell signals, the only thing which one needs to do is to have the discipline to follow the written signals rules the exact way they are, and wait for a buy or sell trade transaction to be indicated by your commodity strategy & trade after the signals have been generated, not before they are generated.

Back Testing

Generating Trading Signals with a commodity system is one of the easiest method to trade commodity trading, it is the best way that a beginner can attempt to determine the direction of the market trend with a good level of accuracy, and with a little back-testing on practice trading account so as to gradually increase the level of accuracy of this commodities trading signals strategy

The best way to back test a commodity strategy is by following these 2 steps:

1. Commodity Trading Paper Trade
2. Demo Trade

Commodity Trading Paper Trading - This method of testing a commodity system involves placing your commodity system on the charts, then take the chart back to a particular date, 3 months back for example, and then using this chart history to determine where your commodity strategy would have given buy, sell and exit signals. Write down these points and the profit per trade transaction on a piece of paper and then calculate the total profit after you have recorded a good number of trades such as 50 paper trades transactions and determine if your commodity method is overall profitable, the win ratio, the loss ratio and the risk:reward.

This is an ancient technique of testing commodity systems that was used by traditional traders when there was no online commodity markets or computers for that matter, the trader would use something like the A3 or A2 paper, graph format paper and draw the trading charts manually (Imagine plotting the charts on your commodity platform by hand every day or every hour, would you be ready to do that? I doubt) Those investors were hardworking than most, some were so used that they still continue to paper trade the online commodity market and draw the charts on paper, anyway for our paper method examples, just a sample data of 50 trade transactions is all we need.

A good commodity tool to use to back test your trading system is known as the MetaTrader 4 Commodity Step by Step Tool. Found in MetaTrader 4 charts toolbar of MT4 trading platform, If you want to find the charts toolbar on the MT4 platform it is at the top of the MetaTrader 4 trading platform. If it is not: Click View (next to file, tops left corner of Meta Trader 4)>>> Tool-Bar >>> Charts. Then click Customize button key >>> Select Commodity Step by Step >>> Click Insert >>> Close.

MetaTrader 4 Platform Chart Tool-Bars - How to Trade Commodity For Beginners

MetaTrader 4 Chart Tool-Bars - Commodity Trading Step by Step Button Key for Back Testing Commodity Systems Discussed

Once you get this Meta Trader 4 tool you can move your commodity chart backwards, & use this Meta Trader 4 tool to move the charts commodity step by step while at the same time testing when your commodity system would have generated either a buy or sell trade transaction, & where you would have exited the trade, then write-down the amount of profit/loss per commodity trade transaction and out of a sample number of commodity transactions you would then calculate the overall profits/losses generated by the commodity strategy.

If your commodity strategy is profitable on paper then, it's time to demo commodity trading trade & testing if the it is profitable on real market as it's on paper method. This is the process of testing or back-testing a trading system.

Writing a Trade Journal

Maintain a Commodities Journal to keep track of profitable commodity trades, & determine why these trades were profitable. And also keep a log of all losing trades, determine why these trades made a loss and the avoid making these same mistakes the next time you trade using your strategy.

Tweak your commodity system until you get a good risk to reward ratio, with commodity signals that you generate. Aim for a good risk: reward of 3:1 and a win ratio of above 70% is a good ratio, with good commodity money management even a strategy with a win ratio of even 30% i.e. Less than half of your transactions make profit you can still make a profit. You might want to read this topic to know what the table below is all about: Risk : Reward Ratio.

Risk-:-Reward Ratio Chart of Commodities Trading Money Management Strategy - Trading Strategies Discussed

Read Commodities Money Management Methods Tutorial Guide

A manual commodity system is still the best way to generate commodity signals compared to automated commodity systems, a manual strategy is a better method and is also much simpler to implement.

However, other traders prefer automated commodities trading systems & for those then they can check the information on this page MQL5 EAs & automated commodities trading systems.

You can also view our extensive list of commodity strategies topics that provides you with various methods of buy & sell technical analysis using a number of diverse technical methods, navigate to the Trading Strategies Section.