Guidelines for creating own Forex trading system

There are several things that we want to achieve with the creation of Forex trading system:

1 Find entry points as soon as possible.
2 Find the exit points ensure maximum profits.
3 Avoid false them input and output signals.

If accomplished, these three objectives will produce a profitable trading system.

Then, where to begin from?

First step

It is the first step, where you will have to answer to yourself: how many hours you want to spend on the negotiation? You prefer sitting opposite the screen continually for several hours short trading (5, 15, 30 minutes) time limits that would require the rapid reaction and constant market price monitoring moves you be more comfortable with setting up your graphics one or two times a day and never turn on your monitor during the rest of the time?

It is about comfort and spend free time you have on your hands that could be in the world of the Forex currency, however, while testing your new strategies you can find out about their performance at different periods of time and then choose more accurate and more profitable.

The second step

There are a lot of trading tools and indicators available for Forex traders, but all could give the fastest signal on the possibilities for future negotiation. And traders, of course, is to enter the trade as soon as possible and to maximize the price movements.

Among the indicators that could provide merchants with a fast signal on upcoming changes and, possibly, trade opportunities are indicators EMA (exponential Moving Average), SMA (Simple Moving Average), parabolic SAR. Fast and slow or full stochastic, MACD and more. The key here is to understand the principles of their work in order to make the most of the signals of these indicators of produce.

A common means to identify a reversal of trend as quickly as possible is to use moving averages. Such simple strategy using AMS 5 and 10 EMA crossover show reversal of trend and new trade opportunity more soon.

Another example would be crossover lines stochastic or lines MACD crossover. The idea is simple: when two line cross each other the trend is changing contrast and new opportunity to entry arise. Indicators Stochastic and MACD also use moving averages.

Combining indicators on a chart and experiment with the values of indicators, merchants can create an optimal and the fastest way to identify opportunities for Exchange at the beginning.

Third step

Currencies have their own "characters" or behavior. Some are extremely active such as GBP/USD and GBP/CHF, some are quite consistent and constant a trend such as EUR/JPY and EUR/GBP.

Set - up different indicators, different values can be used to obtain the best results for each currency pair.

Also a good idea is to find the hours most active for a chosen currency pair. Currency higher operating hours are easy to spot in the ranking and should be used to obtain the maximum benefits in negotiating session.

Fourth step

Once we have found the time, indicators and the pair (s) of currency that best address it is time for the most critical step - find additional tools/indicators to be confirm has received signals earlier and give a green light for the action or save trader fake-outs.

As a trader indicator confirmation can again use any indicator or commercial tool he is familiar. It is recommended to be more sophisticated in the choice of an additional tool to confirm the preliminary signal. It could also be the same but with different parameters indicator.

For example, with our AMS initial 5 and 10 EMA crossover method we could use the additional line of the 20 EMA and wait 5 EMA crosses 10 EMA (which is the first signal) and continuing through 20 EMA (that would be our confirmation of action).

Or rather, we could opt for the MACD indicator - this is a very good Forex indicator that can reveal a lot of useful information. Find the best setting of value of work for MACD (it has initial settings are (12, 26, 9)) which will perfectly match our schedule and the particular currency behavior we can use it as an indicator of great confirmation to separate the most promising of false trades, losing ones.

Other good indicators and tools to confirm the signals are RSI, Stochastic, etc. of Fibonacci. Improvisation and learning trader can find the one that produce better results.

Part II to continue...

Edward Revy,
http://Forex-strategies-revealed.com/
Copyright © Forex strategies revealed

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