How to Generate Trade Signals with Systems
Generating XAUUSD MetaTrader 4 Free Signals
The only method of gold trading is through xauusd 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 signals isn't easy and requires you to have a lot of trading analysis knowledge & 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 signals with systems is to open a free practice demo account & test your signals on this practice trading 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 signals on a live account.
The technique of how to practice generating these signals as well as how to back test the signals on the demo gold account using MT4 platform is discussed below:
So, How Can a Trader Generate Trade Signals?
The best method of generating signals is through systems, You can Learn how to create systems from the lesson how to create Systems on the right navigation menu under the tutorials Key Concepts.
A system is a combination of one or two or more indicators with written rules of how these indicators will generate these signals.
Take an example of the simplest system or strategy known as MA cross-over method. A buy signal or sell signal gets generated when there is a crossover of the 2 moving averages: either a buy signal for an upwards Moving Average cross-over or a sell signal for downwards trend.
Generating XAUUSD MT4 Free Signals - Gold Signals MT4 Indicator Strategy MA Crossover Strategy
The system example depicted and explained below portrays a 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 Signals MT4 Indicator Strategy
In generating buy and sell signals, traders should use simple systems to generate these signals.
Generating XAUUSD MT4 Free Signals - Gold Signals MT4 Indicator Strategy - Buy & Sell Signals
Generating XAUUSD MetaTrader 4 Free Signals
An example of a simple gold system that works, is one that's a combination of:
- Moving average cross-over strategy
- RSI
- MACD
The written gold rules are:
Generating 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 Signal
Exit signal gets generated when MA, RSI and MACD indicator give a signal in opposite trend 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 rules will give good buy & sell signals, the only thing that 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 gold strategy & trade after the signals have been generated, not before they are generated.
Back Testing
Generating Signals with a 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 trade account so as to gradually increase the level of accuracy of this signals strategy
The best way to back-test a strategy is by following these two steps:
- Paper Trade
- Demo Trade
Gold Paper Trading - This method of testing a system involves setting your trading system on the charts, then take the chart back to a particular date, 3 months back for example, & then using this chart history to determine where your trading strategy would have given buy, sell & 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 gold transactions and determine if your method is overall profitable, the win ratio, the loss ratio and the risk:reward.
This is an ancient method of testing systems which was used by traditional traders when there was no online markets or computers for that matter, the trader would use tools like A3 or A2 paper, graph format paper and draw the charts manually (Imagine plotting the charts on your software manually every day or each 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 trades is all we need.
A good tool to use to backtest your system is known as the Meta Trader 4 Trading Step by Step Tool. Found in MT4 charts tool-bar of MetaTrader 4 software, If you want to find the charts tool bar on the MT4 it is at the top of MT4 software platform. If it's not: Click View (next to file, top-left corner of MT4)>>> Tool-Bar >>> Charts. Then click Customize button >>> Choose Gold Step by Step >>> Click Insert >>> Close.
Meta Trader 4 Platform Chart ToolBars - How to Trade Gold for New Traders
Meta Trader 4 Chart Tool-Bars - Gold Step by Step Button for Back Testing Gold Systems Explained
Once you get this Meta Trader 4 tool you can move your chart backwards, & use this MetaTrader 4 tool to move the charts step by step while at the same time testing out when your system would have generated either a buy or sell transaction, & 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 transactions you would then calculate the overall profits/losses generated by the strategy.
If your gold strategy is profitable on paper then, it's time to demo gold trade and testing if the it is profitable on the real market as it's on paper method. This is the process of testing or back-testing a system.
Maintain a XAUUSD Journal to keep record of profitable trade transactions, and determine why these trade transactions were profitable. And also keep a log of all losing trades, determine why these trades made a loss & the avoid making these same mistakes the next time you trade using your trading strategy.
Tweak your xauusd system until you get a good risk : reward ratio, with the 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 money management even a strategy with a win ratio of even 30% i.e. Less than half of your gold transactions make profit you can still make a profit. You may want to read this lesson 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 Equity Management Strategies Tutorial
A manual system is still the best way to generate signals in-comparison to automated systems, a manual 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 Expert-Advisors and automated 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 Strategies Section.
