MT4 Template Trading System

A Stock Trading System refers to a set of stock rules that you follow to manage your trades. These written stock rules will determine when you open a stock trade and when you will exit. A stock trade system is created by combining two or more stocks indicators.

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

• RSI indicator
• MACD indicator
• Moving Averages indicators

Examples - MT4 Template Trading System Example

Creating a Stock System - Stock System Example Template

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

Seven steps to creating an technical indicator based trading system

To come up with these set of stock 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 stock trading. Whether you prefer sitting in front of the Desktop computer constantly for several hours interpreting short stocks chart timeframes OR you prefer setting up your stock charts using bigger chart timeframes once or twice a day. Choosing a chart timeframe will mainly depend on what type of trader you are.

Chart Time Frames on MT4 Platform

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

2. Choose indicators to identify a new stock trend

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

One of the common ways to spot a new stock trend as fast as possible is to use Moving Averages Indicator. A simple stock trading strategy is to use a moving average crossover system that will identify a new trading opportunity at its earliest stage.

Moving Average Crossover Technique

Sell stock signal & Buy stock signal Generated by Moving Average Crossover Stock Trading Method

3. Choose additional indicators to confirm the stock trend

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

To confirm the stock trading signals we use RSI indicator & Stochastic Oscillator indicator.

RSI Stocks Indicator & Stochastics Oscillator Stock Technical Indicator System

4. Finding stocks trading entry and stocks trading exit points

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

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

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

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

Generating Stock Signals - how to Generate Trading Signals.

Generating Trade Signals

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

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

5. Calculate risks in each Stocks trade setup

In Stock, you must calculate your risk for each trade. Serious 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 Risk to Reward Chart below shows you how:

Stock Money Management Reward Risk Chart - Examples Template Trading System

In the first example of Risk to Reward Ratio, you can see that even if your trading system only won 50% of your trades, you would still make profit of $10,000. Interpret more on this stock trading money management stock trading topic: Here Stock Trading Money Management Rules - MT4 Template Trading System and Stock Money Management Strategies Methods - Template Trading System Example.

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

6. Write down the stock systems rules & follow them

A Stock 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 don't follow the stock rules then you do not even have a stock system in the first place.

The next stock trading systems guide shows you an example of how to use above steps to come up with your own Stock online stock trading system:

Next Guide: Examples of Writing Stock Trade Systems Rules

7. Practice on a Practice Account

Without enough trades, you will not be able to realize the true profitability of your trading system.

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

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

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

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