How To Set up a Trading System #3
The Basic Entry Trading Rules
We have discussed the first section on how to setup a trading system. This is our example trading system in which the main goal is to discuss the main items I think about when designing a trading system.
The first part is only to identify the main trading indicators. The second part is to figure out the basic entry rules in the system.Please note this is not the trading system yet. We are only trying to figure out the basic entry method we are going to use.
Remember that there are 5 parts in a trading system
- Basic Entry Rules
- Trend Identification
- Exit Rules ( Risk Management)
- Money Management
- Putting Everything together in a Forex Trading Plan
Buy Entry Rules
1. Buy or go long when the 10 ema crosses above the 20 ema.
2. Only buy when the rsi 45 is above the 50 middle line in your rsi.
Sell Entry Rules
1. Sell or go short when the 10 ema crosses down the 20 ema.
2. Only sell when the rsi 45 is below the 50 middle line in your rsi.
Note that this is very basic but for new traders who have never tried a system from beginning to the end try it on your demo account and don’t diverge from it. You get to learn a bit about discipline especially when a trading system is not working.
We are still very far from trading the system but at least you get the basic trading idea. Next we shall look for various ways to identify the underlying trend including using time analysis, multiple time periods etc.
For those that use xtick proffessional I will download a template and a how to in the forum tommorow afternoon so as to create a simple visual set up that would allow you not to have to look and search for where the ma crossovers and the rsi above 50 areas are.
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Thanks,
I’m a novice / greenhorn / newboy on the block.
I’m truly grateful for the education as I try to find the needle in the hay stack to get me to the next level.
Guess, I’m enjoying the journey as I learn something new each day. Your site was a treasure as I have a little insight about back testing.
One day at a time will do me and I am in no hurry to dive into the deep.
Thanks once again.
Regards
Kev.