How Do You Generate Signals with Trade Systems?
Only method of trading is through signals, It is best to learn how to generate these signals for yourself, this way you don't have to rely in others to generate them signals for you.
Generating signals isn't easy & requires you to have a lot of technical analysis knowledge & experience, but the earlier you begin practicing how to generate these signals for yourself the better it's for you.
A good method of how to practice generating signals with systems is to open a free practice demo demo account and test out your trading signals on this demo trading account risk-free without risking your money, then once you have tested your strategies and they're profitable you as a stock indices trader can then use them on a live account.
Method of how to practice generating these signals & also how to back test them on the practice demo account using the MT4 platform is discussed below:
So, How Can a Trader Generate Indices Signals?
The best method of generating signals is through systems, You can Learn how to create Indices systems from the lesson how to create Systems on the right navigation menu under the topics Index Key Concepts.
A Stock system is a combination of one or two or more indicators with written rules of how these indicators will generate these signals.
Take an illustration example of the simplest system or strategy known as moving average cross over trading strategy. A buy or sell is generated/derived when there's a crossover of the two moving averages: either a buy for an upwards cross-over or a sell for downward trend.
Example of Generating Signals Using MA(Moving Average) Cross over Method
The system example below shows and illustrates a system using the above moving average trading strategy combined with the RSI & MACD indicators to generate buy & sell Index trades.
Example of Online Systems & Trade Strategies
In generating buy & sell signals, Index traders should use simple Indices systems to generate these.
Stock Index Systems
An example illustration of a simple Stock system that works, is one that is a combination of:
- Moving Average crossover trading method
- RSI
- MACD
The written rules are:
Generating Trading Signals Strategies - System Examples
Stock Index Trade Rules:
Buy Signal is Generated when:
- Both Moving averages going up
- RSI above 50
- MACD above centerline
Sell Trading Signal is Generated when:
- Both Moving averages going down
- RSI below 50
- MACD below center-line
Generating Buy and Sell Stock Index Trades - Example of a Trading Strategy
Exit Signal
Exit signal gets derived/generated when Moving Average, RSI & MACD give a trading signal in the opposite market direction.
The chart time-frame to use is H1 time frame or 15 minutes chart timeframe depending on what type of trader you are.
For a beginner trader the above written rules will give goodbuy & sell Index trade signals, only thing which a indices 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 for a buy or sell Index trade transaction to be indicated by your strategy & trade after the trade signals have been generated, not before they are generated.
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