Creating a Stock System That Works
When creating your own stock trading system, there are a few things to keep in mind. Your stocks strategy needs to be able to spot new Stocks Trading market trends, while at the same time making sure you don't to get faked out/whipsaws. Real trick is, once you have created a stock system that works for you, stick to it. Being disciplined will help you a lot in becoming successful in stocks.
Before trading Stocks on a live stock trading account, you've to figure out what stocks strategy works for you. It is good to know in what chart time-frame you are going to be working in, and how much you are willing to risk once you begin stocks online. All these factors should be factored in, & should be written down within your stock trading plan. A good place to test this stocks plan would be on a free practice trading account. This is where you test your stocks strategies risk free without investing money to determine which strategy is best suited for you.
So, now how can a trader like you come up with a "good stocks system" or the "best stock trading system"?
To come up with a good stocks strategy the first thing to do is to define your main aim or goal:
The following example illustrates a goal & explains the stocks rules of how to achieve that goal
Stocks Trading Goals
1.Identify a new stocks trend
Moving average crossover method stocks strategy is the most commonly used strategy to identify a new stock trend. The time to open a long or short trade is decided when two moving averages indicators cross over or cross under each other.
2.Confirm the new stocks trend
Relative Strength Index(RSI) Indicator and Stochastic Oscillator Indicator are the most commonly used stocks technical indicators to confirm a Stocks trend.
Indicator based Stocks System
The best type of a stocks method is one that is indicator-based. You will find it straight forward to generate the stocks signals & thus less error-prone on your part and this will help you to avoid market whipsaws.
There are several things we want to achieve when creating a system:
- Find entry points as early as possible.
- Find exit points securing maximum gains.
- Avoid fake entry and exit signals.
- Proper Money Management Rules
Finishing these 4 goals will result in a profitable stock trading strategy that works.
The last piece of information needed, is deciding how aggressive you're going to be when entering & exiting a trade. Those traders who are more aggressive wouldn't wait until the stock chart candle closes and would enter as soon as their technical indicators match up. But most traders would wait until the stocks chart candle of the chart timeframe they are using has closed, to have more stability when entering a the stocks market.
To get profits out of the stocks market you need to build your own profitable stocks system: a method that will generate profitable stocks signals. You need to have your own stocks strategy that will help you achieve your financial goals. Sometimes the best trading systems are the ones that you build on your own. No need to keep searching online for best stock trading systems or for stock systems which work, this website provides you with all the stocks tools required to help you & guide you on how to come up with your own stock trading systems.
Below is example of a Stocks trade system based on RSI, MACD and Stochastic.
Stocks System - Best MT4 Templates Stocks Systems
The stocks system example above is comprised of four technical indicators in total, all of these generate Stocks trade signals using different methods, the moving average will generate stocks signals using the moving average crossover method shown, the RSI indicator, Stochastic indicator and MACD indicator use different technical analysis to generate the long and short signals as shown in the above example. How to generate these Stocks Trading signals is discussed in the next topic (on the sidebar navigation learn tutorials menu under key concepts).
For beginner traders, it's difficult for them to create their own stock trading strategies since they don't have a lot of knowledge about the stock market. However, this learn stocks site will explain how a beginner trader can create their own free stock trading system in just seven easy steps. The best strategy is one you create yourself & learn how to trade the stocks market with it.
The main advantage of creating your own free stock systems is that you will know how to make profits by yourself - & not rely on other peoples efforts.
In the next lesson located at the sidebar navigation learn courses menu below the stocks key concepts will show you how to create a stocks system like the one above, write it's stocks rules and how to back-test the stocks system on a practice demo stocks trading account before using it on a live stock trading account.
4 Examples of Free Stock Systems
Example 1: The Moving Average Crossover Method
The moving average indicator cross over method uses two moving averages to generate Stocks Trading signals. The first Moving average uses a shorter period & the second is a longer period.
Moving Average Crossover Technique - Moving Average Crossover Stocks Strategy
This above stocks method is referred to as the moving average crossover method because stock trading signals are generated when two averages cross above or below each other.
Stocks System Example - Short & Long signal Generated by Stocks System
A buy signal or going long trade is generated when shorter moving average indicator crosses above longer moving average technical indicator (Both Moving Averages Moving Up).
A sell signal or a going short trade is generated when shorter average indicator crosses below the longer moving average technical indicator (Both Moving Averages Moving Down).
Example 2: Stochastics Stocks System
Stochastic Oscillator technical indicator can be combined with other indicators to form a trading system.
- RSI stocks trading technical indicator
- MACD stocks trading technical indicator
- Moving Averages stocks trading technical indicators
Trading Systems Examples - Best MT4 Templates Stocks Systems
Short Signal or Sell Stocks Signal
How the short sell Stocks signal was generated
From our stocks rules the short signal is generated when:
- Both Moving Averages are heading down
- RSI is below 50
- Stochastic moving downward
- MACD moving downward below center-line
Short trading signal was generated when all the written stocks rules were met. Exit signal is generated when a stocks signal in opposite direction is generated.
Good thing about using such a stocks method is that we are using different types of technical indicators to confirm the stocks signals & avoid as many whipsaws as possible in the process.
- Stochastic - stocks momentum oscillator indicator
- RSI - stocks momentum oscillator indicator
- Moving Averages Stock TradingTechnical Indicator - stocks trend following indicator
- MACD - stocks trend following oscillator
Based on the chart timeframe used - this strategy can be used as Stocks Trading scalping system when the minute trading charts are used or as a Stocks Trading day stocks system when hourly charts are used.
Example 3: Trading System Stocks Trading Example
This system is fully explained within the stock trading plan on the stock trading plan lesson on this learn stocks web site under the Stocks Trading key concepts section located on right navigation menu.
Chart Timeframe
1 hour stocks trading chart
Indicators that identify a new stocks trend
Moving Average Crossover Technical Indicators Strategy
Indicators that confirm the stocks trend
RSI indicator
STOCHASTIC OSCILLATOR technical indicator
Long Entry - Buy Signal
1. Both MA(moving averages) pointing up
2. RSI above 50
3. Both stochastics going up
Short Entry - Sell Signal
1. Both Moving Average pointing down
2. RSI below 50
3. Both stochastics going down
Exit Signal
1. Moving Average Technical Indicator gives opposite signal
2. RSI gives opposite signal
Risk Management in Stock Trading
Stop Loss - 35 pips
Take Profit Stocks Order - 70 pips
Reward to Risk 2:1
Example 4: New Gann Swing Stocks Trading Chartist Plan
The Gann Swing Oscillator is meant to be used in combination with the Gann HiLo Activator & Gann Trend to form a complete Stocks Trading strategy commonly referred to as the - 'New Gann Swing Chartist Plan'. Within this methodology the Gann Swing Oscillator is used to help determine stocks market swings for trading only within the current market stocks trend is shown by the Gann Trend.
Below is example of the New Gann Swing Chartist Plan
Gann Chartist Plan - Stocks Systems - MT4 Template Stocks System
