Trading System Rules: Write Down The Rules and Follow Them

We shall use the 1 hour chart to write the rules of this strategy - trading system.

A system refers to written set of written rules that you follow to manage your trades. These rules must be written so as to guide you. The following learn trading tutorial will show you how to write the rules of your trading system.

The keyword is a SET OF Stock Index Trading RULES which you must follow. If you don't follow the rules then you do not have a system. Stock Index systems must have rules which are written down within your plan.

Example of Trading System below:

Writing Down Rules of a Stock Index System - 1 hour Trading Chart Time frame Trading

You can create the above system using the steps below:

Step 1:

Choose your Chart Time Frame - 1 hour chart

Step 2:

Choose Indicators that identify a new trend - MA Moving Average Crossover System.

Step 3:

Select Indicators that confirm the trend - RSI, Stochastic

Step 4:

Finding entry and exit points

Long Entry

1. Both MA pointing up
2. RSI above 50
3. Stochastic oscillator going up

Short Entry

1. Both Moving Average pointing down
2. RSI below 50
3. Stochastic oscillator going down

Exit

1. MA gives opposite signal
2. RSI gives opposite signal

Step 5:

Calculating risks in each trade - 20 pips

Step 6:

Write down the trade system Stock Index rules

Step 7:

Test the system on a practice demo account

After using the steps we create a written system rules below.

Writing Trading System Rules

Example of How Do You Write the Best System Rules

This system produces the signals as shown below. Using these rules traders can determine when to enter & exit Stock Indices trades.

Generate Buy & Sell Signals using Written Indices System Rules

We have completed writing the rules, if you are researching on how to create the best Stock system, this learn trading tutorial is a good begin to guide you on how to do just that. This is one part of a the plan. Now how do you create a complete Stock Index plan? To read about Forex plan tutorial go to the right navigation menu of this website under Indices key concepts where you can find a link for this trade plan topic.