Trade Gold Trading

MT4 Template System

A Trading Strategy refers to a set of trade rules which you follow & adhere to to manage your trades. These written rules will determine when you open/execute a trade and when you'll exit. A trade system is developed by combining 2 or more technical indicators.

For example illustration, the Stochastics Indicator Indicator can be combined with other indicators to form a system strategy. For this exemplification - stochastic oscillator can be combined with the technical indicators below to come up with the following system.

  • RSI indicator
  • MACD
  • MAs trading indicators

Examples - MetaTrader 4 Template Trading Strategy Example

Gold Strategy Guide How to Write Rules of System Example Explained

Making a Trading Strategy - System Example

So the question is how can a trader come up with trading systems that work like the trading system example above & how does one write down it's rules? to write the system trading rules follow the steps below.

Seven steps to creating a technical indicator based system

To create these set of trade rules we shall use the following seven steps.

1. Select your Timeframe

This first step depends on the number of hours you want to set a side to trading. Whether you prefer to sit in front of the Desktop computer throughout for several hours analyzing the short timeframe OR you prefer setting up your trading charts using bigger time frame once or twice in a day. Choosing/Selecting a chart timeframe will mainly depend on what type of trader you're.

Creating a Strategy To Trade with - System Tutorial How to Write Rules of Strategy Described

TimeFrames on MT4 Software

While testing your new strategy you might & may want to find out about its performance on different chart timeframes and then choose the most accurate and profitable chart timeframe for you.

2. Choose and Select indicators to identify a new trend

The goal of a trader is to get into the trade as early as possible and take maximum advantage of price moves.

One of the common ways to spot a new trend as fast as possible is to use MAs Trading Indicator. A simple system is to use a MA cross-over system that will identify a new trading opportunity at the earliest stage.

Moving Average Cross over Technique

Creating a XAUUSD System To Trade XAUUSD with

Sell signal & Buy trading signal Generated by Moving Average MA Cross over Method

3. Select additional technical indicators to confirm the trend

Once we find a new market trend we need to use additional technical indicators that will confirm the entry signals & give either a green light for action or save a trader from fake outs.

To confirm the trading signals we use RSI and Stochastic Oscillator.

Making System To Trade XAUUSD with - XAUUSD Plan and System

RSI Indicator and Stochastic Oscillator Indicator System

4. Finding xauusd entry and xauusd exit points

Once indicators are chosen so that one indicator gives the trading signal and another indicator confirms the trading signal, it is time to enter a trade.

A trader should enter a trade as soon as a signal is generated and confirmed after a candlestick closes.

Aggressive traders enter a trade immediately without waiting for the current price bar to close.

Other traders wait until the current price candlestick is closed & then enter the trade position if the Gold trade setup has not changed and the trading signal remains valid. This method is more considerate and prevents additional false entries and trading whipsaws.

Generating Signals - how to Generate Signals.

Gold Strategy Guide How to Write Rules of System Example Explained

Generating Signals

For exits, a trader can either set an amount the wants to earn per trade or use technical tools that help to set profit goals like Fibonacci expansion tool or set a protective stop loss order depending on the price volatility at any given time. Alternatively a trader can exit when the technical indicators give a signal in the opposite trend signal.

When opening a new trade it's always key to calculate in advance how much you are willing to lose if the Gold trade moves against you. Although the goal is to develop the best system in world, losses are inevitable and hence being ready to tell where you'll give up & cut your losses before starting a trade is very important.

5. Calculate risks in each trading setup

In XAUUSD, you must calculate your risk for each trade. Serious traders will only enter and look to execute an order if the risk:reward ratio is 2:1 or more.

If you use a high risk : reward like 2:1, you significantly increase your chances of becoming profitable in the long run.

The Risk-Reward Chart below portrays you how:

Making System To Trade XAUUSD with - Strategy Tutorial How to Write Rules of System Explained

Gold Trade Money Management Risk Reward Chart - Sample Template Trading Strategy

In the first examples of Risk-:-Reward Ratio, you can observe that even if your system only won 50% of your trade positions, you'd still earn profit of $10,000. Interpret more on this money management trading topic: Here Gold Trade Money Management Rules - MetaTrader 4 Template System and Gold Equity Management Methods - Template Trading Strategy Example.

Before opening a new trade, a xauusd trader should define the point at which they will close the Gold trade if it turns to be a losing trade. Some traders use Fibonacci retracement levels tool and support and resistance zones. Other traders just use a pre-determined stop loss order to set stop losses once they've opened a trade.

6. Write down the systems rules and follow them

A Trading Strategy refers to a set of trade rules that you follow to manage your trades.

The keyword is A SET OF TRADING RULES which you must follow. If you don't follow the trading rules then you don't even have a trading strategy in the first place.

The next systems guide shows you an example of how to use above steps to develop your own online trading system:

Next Lesson: Explanation of Writing Trading Systems Rules

7. Practice on a Practice Trade Account

Without enough trades, you won't be able to realize the true profitability of your system.

Once you have your trading system rules written, it is time to test and improve your trading system by using it on a practice trade account.

Open free practice account & trade your strategy to see how well it will respond.

It's strongly recommended to begin and start with a practice account and practice for at-least for 1 or 2 months so as to gain some practice and experience how the market works.

Once you start & begin earning some decent profit on your demo account you as a trader can then try opening a live account & begin trading with real money.

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