Trading System Rules: Write Down The Rules of Your System & Follow Them

We shall use the previous steps to create a written trading system that generates the trade signals shown below using the 1H chart. We shall use the H1 chart to write down the rules of this trading strategy.

A system refers to set of written trading rules that you follow to manage your trades when trading in the market. These trading rules must be written down so that to guideyou. The following tutorial will explain to you how to write down the rules of your system.

The key-word is SET OF RULES which you as a FX trader must follow. If you do not follow the trading rules then you do not have a trading system. Systems must have rules that are written down within your plan.

Explanation of System below:

Writing Rules of a Strategy - 1 Hour Chart Time Frame System Template Example

Writing Rules of a System - 1H Chart Time Frame System Example Template

You can create the above system using the steps below:

Step 1:

Choose your Chart Time-frame - H1 chart

Step 2:

Choose Indicators which spot a new trend - MA Crossover System.

Step 3:

Select Indicators that confirm the trend - RSI, Stochastic

Step 4:

Finding entry & exit points
Long Entry
Both Moving Average pointing up
RSI above 50
Stochastic oscillator technical indicator going up
Short Entry
Both MA pointing down
RSI below 50
Stochastic oscillator technical indicator going down
Exit
Moving Average generates in the in the opposite trend trend trend trend trend trend trend signal
RSI generates in the in the opposite trend trend trend trend trend trend trend signal

Step 5:

Calculating the risks in each trade - 20 pips

Step 6:

Write down the trade system rules

Step 7:

Test the trading system on a practice account

After using the guide-lines we come up with the written system rules below.

Writing System Rules

Write Rules System - Writing Strategy Rules

Example of How to Write System Rules - Writing Systems Rules

This trading system produces the signals as shown below. Using these rules, traders can determine when to enter and exit trade positions.

How Do I Generate Buy and Sell Trading Signals using Written System Rules?

How to Generate Buy & Sell Trading Signals using Written System Rules

We have finished writing the trading rules, if you are researching on how to develop the best system, this tutorial is a good start to lesson you on how to do just that. This is one part of the trading plan. Now how do you as a trader create a complete trading plan? - To read about how to create a trading plan go to the right navigation menu of this website under the key concepts where you as a forex trader can find a link for this trade plan tutorial topic.

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