Creating a Gold Trading System: Indicator Based Gold Trading System - MetaTrader 4 Template Gold Trading System
A Gold Trading System refers to a set of gold trading rules that you follow to manage your gold trading trades. These written gold trading rules will determine when you open a gold trading trade and when you will exit. A gold trading trade system is created by combining two or more gold trading technical indicators.
For example, the Stochastic Oscillator indicator can be combined with other gold trading indicators to form a gold trading system. For this example - stochastic oscillator can be combined with the gold trading technical indicators below to come up with the following gold trading system.
- RSI indicator
- MACD indicator
- Moving Averages indicators
Example - MetaTrader 4 Template Gold Trading System Example
Creating a Gold Trading System - Gold Trading System Trading Example
So the question is how can a gold trader come up with Gold trading systems that work like the gold trading system example above and how does one write it's gold trading rules? to write the gold trading system trading rules follow the steps below.
Seven steps to creating an indicator based Gold trading system
To come up with these set of gold trading rules we use the following seven steps.
1. Choose your Gold Trading Chart Time Frame
This first step depends on how many hours you want to dedicate to gold trading. Whether you prefer sitting in front of the computer constantly for several hours analyzing short gold trading chart time frames OR you prefer setting up your gold trading charts using bigger gold trading chart time frames once or twice a day. Choosing a gold trading chart time frame will mainly depend on what type of gold trader you are.
Gold Trading Chart Time Frames on MetaTrader 4 Gold Trading Software
While testing your new Gold trading system you may want to find out about its performance on different gold trading chart time frames and then choose the most accurate and profitable gold trading chart time frame for you.
2. Choose indicators to identify a new gold trading trend
The goal of a gold trader is to get into the trade as early as possible and take maximum advantage of gold trading price moves.
One of the common ways to spot a new gold trading trend as fast as possible is to use Moving Averages Indicator. A simple gold trading strategy is to use a moving average crossover system that will identify a new trading opportunity at its earliest stage.
Moving Average Crossover Method
Sell gold trading signal and Buy gold trading signal Generated by Moving Average Crossover Gold Trading Method
3. Choose additional gold trading indicators to confirm the gold trading trend
Once we find a new gold trading trend we need to use additional indicators that will confirm the entry gold trading signals and give either a green light for action or save a gold trader from fake-outs.
To confirm the gold trading signals we use RSI indicator and Stochastic Oscillator indicator.
RSI Gold Trading Indicator and Stochastic Oscillator Gold Trading Indicator Gold Trading System
4. Finding gold trading entry and gold trading exit points
Once gold trading technical indicators are chosen so that one gold trading indicator gives the trading signal and another indicator confirms the trading signal, it is time to enter a gold trading trade.
A Gold trader should enter a gold trading trade as soon as a gold trading signal is generated and confirmed after a candlestick closes.
Aggressive gold traders enter a gold trading transaction immediately without waiting for the current gold price bar to close.
Other gold traders wait until the current gold price bar is closed and then enter the gold trading trade transaction if the trade setup has not changed and the gold trading signal remains valid. This method is more considerate and prevents additional false entries and gold trading whipsaws.
Generating Gold Trading Signals - how to Generate Gold Trading Signals.
Generating Gold Trade Signals
For exits, a gold trader can either set an amount he wants to earn per trade or use technical gold trading tools that help to set profit goals like Fibonacci expansion tool or set a protective stop loss depending on the gold trading market volatility at any given time. Alternatively a gold trading trade can exit when the gold trading indicators give an opposite trading signal.
When opening a new gold trading trade transaction it is always important to calculate in advance how much you are willing to lose if the gold trading trade transaction goes against you. Although the goal is to create the best Gold trading system in the world, losses are inevitable and therefore being ready to tell where you will give up and cut your losses before starting a gold trading trade transaction is very important.
5. Calculate risks in each gold trading trade setup
In Gold, you must calculate your risk for each goldtrade. Serious gold traders will only enter and look to open an order if the risk to reward ratio is 2:1 or more.
If you use a high risk to reward ratio like 2:1, you significantly increase your chances of becoming profitable in the long run.
The Reward to Risk Chart below shows you how:
Gold Trading Money Management Reward Risk Chart - Example Template Gold Trading System
In the first example of Risk to Reward Ratio, you can see that even if your gold trading system only won 50% of your gold trading trades, you would still make a profit of $10,000. Read more on this gold trading money management gold trading topic: Here Gold Trading Money Management Rules - MetaTrader 4 Template Gold Trading System and Gold Trading Money Management Methods - Template Gold Trading System Example.
Before opening a new gold trading trade, a gold trader should define the point at which they will close the gold trading trade if it turns to be a losing gold trading trade. Some traders use Fibonacci retracement levels tool and support and resistance levels. Other gold traders just use a pre-determined stop loss to set stop loss gold trading orders once they have opened a gold trading trade transaction.
6. Write down the gold trading systems gold trading rules and follow them
A Gold Trade System refers to a set of rules that you follow to manage your gold trading trades.
The keyword is A SET OF TRADING RULES which you must follow. If you don't follow the gold trading rules then you don't even have a gold trading system in the first place.
The next Gold trading systems lesson shows you an example of how to use the above steps to come up with your own Gold online gold trading system:
7. Practice on a Demo Account
Without enough trades, you will not be able to realize the true profitability of your Gold trading system.
Open a free demo practice account and trade your gold trading system to see how well it will respond.
It is strongly recommended to start with a demo gold trading account and practice for at least for 1 or 2 months so as to gain some practice and experience how the gold trading market works.
Once you start making some decent profit on your demo gold trading account you can then try opening a live Gold trading account and start trading with real money.