{"id":107815,"date":"2017-06-28T09:54:34","date_gmt":"2017-06-28T13:54:34","guid":{"rendered":"http:\/\/countingpips.com\/?p=107815"},"modified":"2017-06-22T09:55:21","modified_gmt":"2017-06-22T13:55:21","slug":"5-steps-for-successful-creation-of-a-trading-system-2","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex\/2017\/06\/5-steps-for-successful-creation-of-a-trading-system-2\/","title":{"rendered":"5 Steps for Successful Creation of a Trading System"},"content":{"rendered":"
June 28, 2017<\/div>
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By Admiral Markets<\/b><\/p>\n

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Dear Traders,<\/p>\n

Creating a good and proven trading system is not an easy job. Different Forex strategies try to predict future prices on the basis of past developments. I call it “Historical vs. Now moment” concept.<\/p>\n

I will explain some of the basic concepts behind different Forex strategies and attempt to summarise the main tools used by traders in breaking down price patterns.<\/p>\n

Traders usually come to me with these questions:<\/p>\n

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  1. How do you make money from forex trading?<\/li>\n
  2. Is it possible to be successful using technical indicators only?<\/li>\n
  3. What are the best technical indicators for successful trading?<\/li>\n
  4. Can you tell us the most predictive and successful indicators for day trading?<\/li>\n
  5. Could you teach us high probability trading strategy system?<\/li>\n<\/ol>\n

    Creating a system that is based on indicators<\/a> is different from price action trading. Forex systems that are created with different indicators can be used successfully if a trader knows how to interpret them. Too much information might cause so called “paralysis by analysis” which can keep you from making trading decisions that are actually profitable. Beginners should know once and for all that there is no best trading system in the world. The system only helps us stack the odds in our favour and make profitable decisions.<\/p>

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    <\/a>\r\n\t Get Our Free Metatrader 4 Indicators<\/u><\/b><\/a> - Put Our Free MetaTrader 4 Custom Indicators on your charts when you join our Weekly Newsletter<\/p>

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    Almost every trading platform comes with a host of indicators that those who engage in technical trading may find useful. You simply apply any of them to your chart, with the system performing calculations based on the past price, current price, and volume.<\/p>\n

    Define Your Dimension in Trading<\/h2>\n

    Trading consists of different styles that I call “dimensions”. You as a trader need to choose which styles you’re more comfortable with. Whatever dimension you choose, rest assured that knowing price action will complement all styles of trading. We can classify Forex trading dimensions as:<\/p>\n

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    1. Price Action<\/li>\n
    2. Price Action and Indicators combined<\/li>\n
    3. Pure Indicator<\/li>\n
    4. Harmonic Patterns<\/a><\/li>\n
    5. Renko<\/a><\/li>\n
    6. Range bars<\/li>\n
    7. VSA (Volume Spread Analysis)<\/li>\n
    8. Point and Figure.<\/li>\n<\/ol>\n

      Define a Timeframe for Your System<\/h2>\n

      When you choose which dimension you will trade in, it is time to choose the appropriate timeframe. Timeframes are generally divided as:<\/p>\n

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      1. Long term investing<\/a> \u2013 Monthly<\/li>\n
      2. Mid to Long term trading \u2013 Weekly<\/li>\n
      3. Swing trading \u2013 Daily<\/li>\n
      4. Intra week Swing trading \u2013 H4<\/li>\n
      5. Intraday trading<\/a> \u2013 M30-H1<\/li>\n
      6. Scalp Swings \u2013 M15<\/li>\n
      7. Scalping<\/a> \u2013 M5-M15<\/li>\n
      8. Extreme Scalping<\/a> \u2013 M1<\/li>\n
      9. MTF (Multiple TImeframe Approach) \u2013 H4 H1 M30 or different combination.<\/li>\n<\/ol>\n

        Pick the Proper Indicators<\/h2>\n

        Very often you will come across a system that has dozens of indicators cluttered on the screen. I must say, that is a completely wrong approach. The more indicators you have, the more issues you run into with you MT4<\/a>.<\/p>\n

        The main purpose of Forex indicators<\/a> is to:<\/p>\n

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        1. define a trend<\/li>\n
        2. confirm a trend and entry<\/li>\n
        3. place SL and TP.<\/li>\n<\/ol>\n

          If you clutter your charts with too many indicators, how will you define the trend, entry and targets? Different indicators will filter out the price too much and you will either enter too late in a trade, or have many bad signals.<\/p>\n

          Both of these situations can deplete your account faster than you can imagine.<\/p>\n

          For a proper system, I recommend a specific:<\/p>\n

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          1. Leading indicator<\/li>\n
          2. Lagging indicator<\/li>\n
          3. Static or Dynamic support\/resistance indicator<\/li>\n
          4. Entry indicator \u2013 usually a leading one.<\/li>\n<\/ol>\n

            Watch the video below to dig deeper into the subject of different indicator types.<\/p>\n

             <\/p>\n