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