MT4 Template Trading System

A Trading System refers to a set of oil rules that you follow to manage your trades. These written oil rules will determine when you open a trade and when you'll exit. A trade system is created by combining 2 or more technical indicators.

For example, the Stochastic Oscillator indicator can be combined with other indicators to form a oil system. For this example - stochastic oscillator can be combined with the indicators below to come up with the following system.

• RSI indicator
• MACD indicator
• Moving Averages indicators

Examples - MT4 Template Trading System Example

Creating a Oil System - Oil System Template Examples

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

Seven steps to creating an technical indicator based system

To come up with these set of oil rules we use the following seven steps.

1. Choose your Chart Time Frame

This first step depends on how many hours you want to dedicate to crude oil. Whether you prefer sitting in front of the computer constantly for several hours analyzing short chart time frames OR you prefer setting up your charts using bigger chart time frames once or twice a day. Choosing a chart time frame will mainly depend on what type of trader you are.

Trading Chart Time Frames in MetaTrader 4 Platform

While testing your new trading system you may want to find out about its performance on different chart time frames and then choose the most accurate and profitable chart time frame for you.

2. Choose 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 crude price moves.

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

MA Crossover Technique

Sell signal and Buy signal Generated by MA Cross Over Oil Trading Method

3. Choose additional indicators to confirm the trend

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

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

RSI Crude Oil Indicator and Stochastic Oscillator Oil Trading Indicator System

4. Finding entry and exit points

Once technical indicators are chosen so that one indicator gives the signal & another indicator confirms the signal, it's time to enter a crude trade transaction.

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

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

Other traders wait until the current crude price bar is closed and then enter the trade transaction if the trade setup has not changed and the signal remains valid. This method is more considerate and prevents additional false entries and fakeout whipsaws.

Generating Signals - how to Generate Trading Signals.

Generating Trade Signals

For exits, a trader can either set an amount that 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 depending on the market volatility at any given time. Alternatively a trader can exit when the indicators give an opposite signal.

When opening a new trade transaction it is always important to calculate in advance how much you are willing to lose if the trade goes against you. Although the goal is to create the best trading system in world, losses are inevitable & therefore being ready to tell where you will give up & cut your losses before beginning a trade is very important.

5. Calculate risks in each trade setup

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

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

The Risk-Reward Chart below highlights you how:

Crude Oil Money Management Reward Risk Chart - Example Template Trading System

In the first example of Risk-:-Reward Ratio, you can see that even if your oil system only won 50% of your trades, you would still make profit of $10,000. Read more on this oil money management oil topic: Here Oil Trading Money Management Guidelines - MT4 Template Trading System and Crude Oil Money Management Techniques - Template Trading System Example.

Before opening a new trade, a trader should define the point at which they will close the trade if it turns to be a losing trade. Some traders use Fibonacci retracement levels tool and support and resistance areas. Other traders just use a pre-determined stop loss to set stop loss orders once they have opened a trade transaction.

6. Write down the oil systems oil rules and follow them

A Trade System refers to a set of rules that you follow to manage your trades.

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

The next oil systems guide shows you an example of how to use above steps to come up with your own Oil Trading online oil system:

Next Guide: Examples of Writing Trade Systems Rules

7. Practice on a Practice Account

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

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

Open a free demo trading account & trade your oil system to see how well it will respond.

It is strongly recommended to begin with a demo account & practice for at least for 1 or 2 months so as to gain some practice & experience how the market works.

Once you start making some decent profit on your demo account you can then try opening a live crude account & start trading with real money.