How to Generate Trade Signals with Trading Systems

Generating XAUUSD Meta Trader 4 Free Signals

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

Generating gold trading signals is not easy and requires you to have a lot of trading analysis knowledge and experience, but the earlier you begin practicing how to generate these signals for yourself the better it is for you.

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

The technique of how to practice generating these signals as well as how to back test the trading signals on the demo gold account using MT4 platform is discussed below:

So, How Can a Trader Generate XAUUSD Trade Signals?

The best method of generating gold trading 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 Key Concepts.

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

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

Generating XAUUSD MT4 Free Signals - Gold Trading Signals MT4 Indicator Strategy MA Crossover Strategy

The trading system example depicted and explained below portrays a trading system using the above moving average strategy combined with the RSI and MACD indicators to generate buy & sell trades.

Example of Generating XAUUSD MT4 Free Signals - Gold Trading Signals MT4 Indicator Strategy

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

Generating XAUUSD MT4 Free Signals - Gold Trading Signals MT4 Indicator Strategy - Buy & Sell Trading Signals

Generating XAUUSD Meta Trader 4 Free Signals

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

• Moving average crossover strategy
• RSI
• MACD

The written gold trading rules are:

Generating Gold Signals Strategy System Examples

Gold Trade Rules:

Buy Trade Signal is Generated when:

• Both Moving averages going up
• RSI value above 50
• MACD above centerline

Sell Trade Signal is Generated when:

• Both Moving averages going down
• RSI value below 50
• MACD below center-line

Generating Buy and Sell Trades - Example of a Strategy

Exit Trading Signal

Exit signal is generated when MA, RSI and 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 starter trader the above written trading rules will give good buy & sell signals, the only thing that one needs to do is to have the discipline to follow the written trading signals rules the exact way they are, and wait for a buy or sell trade transaction to be indicated by your gold strategy & trade after the signals have been generated, not before they are generated.

Back Testing

Generating Trading Signals with a trading system is one of the easiest method to trade gold, 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 trading signals strategy

The best way to back test a trading strategy is by following these two steps:

1. Paper Trade
2. Demo Trade

Gold Paper Trading - This method of testing a trading system involves placing your trading 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 trading strategy would have given buy, sell and exit trading 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 gold trading transactions and determine if your trading method is overall profitable, the win ratio, the loss ratio and the risk:reward.

This is an ancient method of testing gold systems which was used by traditional traders when there was no online 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 trading 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 market & draw the charts on paper, anyway for our paper technique examples, just a sample data of 50 trade transactions is all we need.

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

Meta Trader 4 Gold Trading Platform Chart ToolBars - How to Trade Gold for New Traders

Meta Trader 4 Chart Tool-Bars - Gold Trading Step by Step Button for Back Testing Gold Trading Systems Explained

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

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

Writing a Trading Journal

Maintain a Gold Journal to keep track of profitable trades, and 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 gold trading system until you get a good risk : reward ratio, with the trading 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 gold trading money management even a trading strategy with a win ratio of even 30% i.e. Less than half of your gold trading 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 to Reward Ratio Chart of Gold Money Management Strategy - Gold Trade Strategies Described

Read Gold Trading Money Management Strategies Tutorial Guide

A manual trading system is still the best way to generate trading signals compared to automated trading systems, a manual trading strategy is a better technique & is also much simpler to implement.

However, other traders prefer automated trading systems & for those then they can check the information on this page MQL5 Gold Expert-Advisors and automated trading systems.

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