Forex Trading System and How to Make It

The forex trading system is one of the most important parts of a forex trading plan. You already know what a forex trading plan is?

Why can this forex trading system be an important part of a forex trading plan?

Because the trading system is a strategy that determines when is the right time to enter the market and when is the right time to get out of the market.

If we as forex traders are able to master this, then we can be sure that we can definitely make consistent profits.

To be able to create a forex trading system, we can use a variety of data sources which we then process until we are able to produce an appropriate Buy/Sell Signal.

What data can we use to create a forex trading system? We can use two or more indicators in forex trading to create a forex trading system.

We can also combine these indicators with other fundamental factors such as interest rate data, inflation data, the number of unemployed, and so on as well as some news or opinions from outside.

After creating a forex trading system, the next step is to run the trading system to generate profits. To run it we can do it manually or automatically.

Make a forex trading system that is simple and easy to do and don't make a forex trading system that is complicated and difficult to implement. Why? Because the easier the forex trading system, the better results we can get.

A. Several Steps How to Create a Forex Trading System

The following are some guide steps to create a forex trading system that we can follow but this is not a rigid thing because if you want to develop it even better, you can.

1. Determine the Time Frame

This time frame is closely related to what type of trader you are. Are you a scalper, day trader, swing trader.

Why are time frames so important? Because the price trend that is formed in each time frame can be different, so we have to decide which type of time frame to use as a benchmark for entering and leaving the forex market.

2. Define Indicators to Determine Trends and Confirmations

For this part all we need to do is determine which indicator fits our own trading style and we don't have to use all of the existing indicators. We only need to choose one or two indicators to determine the entry and exit points of the market.

Personally, I only use Moving Average (MA) to determine (trend) whether the price is bullish / bearish and Stocastic to determine when is the right time to enter or exit the market (confirmation).

I also don't use too many combinations of indicators to determine this. Why? Because the more indicators that are used, the more difficult it is to run this forex trading business, because we think and get confused over time, which ultimately never executes forex trading activities.

3. Define Risk Management

What is risk management? So, when compiling a forex trading system, we must not miss implementing risk management. We have to determine the point of Stop Loss and also Take Profit which is done in one touch or with the trailing method.

Why should it be done? Because risk management can protect our forex trading account from margin calls or losses.

Most forex traders experience losses or at least have experienced losses because they have never implemented risk management or are not disciplined in applying it.

And this is a matter of mindset or psychological factors.

4. Determining the Right Time to Enter and Exit the Forex Market

We have previously said that the trading system is a strategy that is needed to determine when the right time to enter and exit the forex market. And if we can do it well then we can get consistent profit from this business.

Yes, we really have to be able to determine what conditions can be used as parameters for the reason why we have to enter the forex market at that time. And vice versa why do we have to get out of the forex market immediately.

To enter the market, we can use the help of reasons number 1 and 2 above, namely the help of time frames and technical analysis indicators.

Or for more details, you can open the page on how to use multiple time frames to determine the Entry Point and Exit Point of your forex trading.

5. Write the Rules of the Forex Trading System and Apply Discipline

The final step on how to create a forex trading system is to write it down and then adhere to the forex trading system for every transaction that we will do.

Why? Because if we have made a forex trading system to make it take a lot of time and thought but it turns out that we don't use it then that means it's all bullshit.

Please write the trading system that you have specified earlier into a notebook or in the form of programming code if you can. And please apply manually or automatically like a forex robot if possible.

But the most important thing and we must do is DISCIPLINE.

What is the last step that is no less important than how to create the forex trading system?

Evaluation of the Formed Forex Trading System Why?

Evaluating the trading system that has been formed and implemented has the aim of improving the performance of the trading system itself so that it can become a tool or guide for making profits.

And we can evaluate using the PDCA (Plan Do Check Action) method.

Plan which means we plan to make a trading system that is powerful (easy and powerful), Do which means disciplinedly apply the forex trading system that we have made with great difficulty, Check which means evaluating / analyzing in case of failure, and Action which means making improvements or improvement of the weakness of the forex trading system.

And you can't do all of that if you just sit still, so please leave this page and ACTION! create your own forex trading system.

Am I not allowed to cheat other traders' forex trading systems? Yes, but it is better if you also make it yourself because usually the conditions and situations of each forex trader are different or you can also develop an existing trading system based on your own experience.

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