How to Generate Signals with XAUUSD Systems
Generating MT4 Free Signals
The only method of xauusd is through signals, It's best to learn how to generate these trading signals for yourself, this way you do not have to rely on others to generate them for you.
Generating signals isn't easy & requires you to have a lot of gold technical analysis trading knowledge and experience, but the earlier you begin practicing how to generate these trading signals for yourself the better it's for you.
A good method of how to practice generating trade signals with systems is to open a free practice XAUUSD Trading practice account & test out your trading signals on this demo account risk free without investing your money, then once you have tested your strategies and they are profitable on the demo trading account you as a trader can then use these signals on a live account.
The technique of how to practice generating these signals & also how to back test the signals on the practice demo gold account using the MT4 software is discussed below:
So, How Can a Trader Generate Signals?
The best strategy of generating signals is through xauusd systems, You can Learn how to create gold systems from the tutorial how to create Systems on the right navigating menu under the tutorials XAUUSD Key Concepts.
A gold system is a combination of one or two or more technical indicators with written xauusd guide-lines of how these indicators will generate these signals.
Take an illustration of the simplest xauusd/gold system or strategy known as MA cross-over method. A buy signal or sell trading signal gets derived/generated when there's a crossover of the two moving averages: either a buy signal for an upward MA crossover or a sell signal for downward trend.
Generating XAU/USD Trading MT4 Free Signals - XAUUSD MT4 Signal Indicator - Signals MT4 Indicator Strategy MA Crossover Method
The system example shown below shows a xauusd system using the above moving average strategy combined with the RSI & MACD to generate buy and sell trades.
Example of Generating XAUUSD Trading MT4 Free Signals - XAUUSD MetaTrader 4 Signal Indicator - Signals MT4 Indicator Method
In generating buy and sell signals, gold traders should use simple systems to generate these signals.
Generating Gold MT4 Free Signals - XAUUSD MetaTrader 4 Signal Indicator - Signals MT4 Indicator Strategy - Buy & Sell Signals
Generating MT4 Free Signals
An illustration of a simple gold system which works, is one that is a combination of:
- Moving average cross-over trading strategy method
- RSI
- MACD
The written xauusd rules are:
Generating Signals Strategy - System Examples
Trade Rules:
Buy Trading Signal is Generated when:
- Both Moving averages going up
- RSI above 50
- MACD above centerline
Sell Signal is Generated when:
- Both Moving averages going down
- RSI below 50
- MACD below center line
Generating Buy & Sell Trades - Explanation Examples of a XAUUSD Strategy Method
Exit Signal
Exit signal gets derived/generated when MA Moving Average, RSI & MACD give a signal in the opposite market trend direction.
The chart time frame to use is H1 chart time frame or 15 minutes chart time frame depending on what type of trader you are.
For a beginner trader the above written xauusd rules will give good buy and sell signals, the only thing which a gold trader needs and requires to do is to have and develop the discipline required to follow the written trading signals rules exactly the way they are, and wait out for a buy/sell trade to be indicated by your strategy & trade after the trade signals have been generated, not before they are generated.
Back Testing
Generating Signals with a xauusd system is one of the easiest method to trade, it is the best way that a beginner can attempt to figure out the direction of the market xauusd trend with a good level of accuracy, & with a little back testing on demo practice trade account so as to gradually increase the level of accuracy of this xauusd signals strategy
Best way to backtest a trade strategy is by following these 2 steps:
- Gold Paper Trade
- Trading Demo Trade
Gold Paper Trading - This method of testing a xauusd system involves placing your system on the trading charts, then take the trading chart back to a particular given date, three months back for example, & then using this chart history to figure out where your trading strategy would have given buy, sell and exit xauusd signals. Write down these points and the profit per trade transaction on a piece of paper & then calculate the overall total profit after you have recorded a good number of trade transactions like 50 paper trade positions transactions and determine if your xauusd method is overall profitable, the win ratio, the loss ratio & the risk: reward.
This is an ancient strategy of testing systems which was used by traditional traders when there was no online markets or desktop pc computers for that matter, the online trader would use tools like the A3 or A2 paper, graph format paper & draw the charts manually (Imagine drawing the charts on your platform by hand every day or every hour, would you be ready to do that? I doubt) Those traders were hardworking than most, some were so used that they still continue to paper trade the online market & draw the charts on paper, anyway for our paper trading method illustration, just a sample data of 50 trade positions is all we need.
A good tool to use to back-test your system is known as the MT4 Gold Step by Step Tool. Found in the MT4 charts toolbar of MetaTrader 4 software, If you want to find the charts tool bar on the MT4 it's at the top of MT4 platform software. If it is not: Press View (next to file, top left corner of MetaTrader 4)>>> Tool Bar >>> Charts. Then click the Customize button >>> Choose XAUUSD Step by Step >>> Press Insert >>> Close.
MetaTrader 4 Software Chart Tool Bars - How to Trade for Beginner Traders
MT4 Chart ToolBars - XAUUSD Step by Step Button for Back Testing Systems Explained
Once you get this MT4 tool you as a trader can move your trading chart backwards, & use this MT4 tool to move the charts xauusd step by step while at the same time testing when your system would have generated either a buy or sell trade, and where you'd have exited the trade, then write-down the amount of profit/loss per trade transaction & out of a sample number of xauusd transactions you'd then calculate the overall profits/losses generated by the trade strategy.
If your strategy is profitable on paper trading method then, it's time to demo xauusd trade and testing if the it's profitable on real market as it is on paper strategy. This is the process of testing or backtesting a xauusd system.
Maintain a Gold Journal to keep track of profitable trades, and determine why these trades were profitable. And also keep a log of all losing positions, determine why these trade positions made a loss and then avoid making the same mistakes the next time you trade using your trade strategy.
Tweak your gold system until you get a good risk : reward ratio, with the trade signals which you generate. Aim for a good risk: reward of 3:1 and a win ratio of above 70% is a good ratio, with good money management even a trade strategy with a win ratio of even 30 % i.e. Less than half of your trade positions make profit you as a trader can still make a profit. You may want to study this lesson to know and learn what the table below is talking about: Risk to Reward Ratio.
Risk to Reward Ratio Chart of Money Management Strategy - XAUUSD Methods Explained
Read Gold Funds Management Methods and Strategies Lesson
A manual xauusd system is still the best way to generate signals compared to automated systems, a manual strategy is a better method & is also much simpler to implement.
However, other traders prefer automated systems & for those then they can check the information on this page MQL5 Gold EAs and automated systems.
You also can view our extensive list of xauusd strategies topics that provides you with various methods of buy and sell trading analysis using a number of diverse trading methods, navigate to the Learn Strategies Section.
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