Developing Basics Trading Systems That Works
When making your own Basics Trading Systems, there are a few factors to keep in mind. Your strategy needs to be-able to identify new Indices market trends, while at the same time making sure you don't to get faked out/whipsaws. The real trick is, once you have come up with a indices trading system which works for you, stick to it. Being disciplined will help you a lot in becoming successful.
Before Indices on a live trading account, you have to figure out what Basics Systems & strategies work for you. It's good to know in what time frame you're going to be working in, and how much you're willing to risk once you begin. All these should be factored in, and should be written within your indices trading plan. A good place to test this would be on a free practice trading account. This is where you test your 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 Basics Systems" or "best Basics Trading Systems "?
To create a good trading strategy the first thing to do is to define your main objective or goal:
The following example illustrates a goal & explains the rules of how to achieve that goal for your Basics Trading System.
Indices Goals
1.Identify a new indices trend
Moving average cross-over method is the most oftenly strategy used to identify a new trend. The time to open a long or short trade is decided when 2 averages cross over or cross under each other.
2.Confirm the new indices trend
Relative Strength Index(RSI) and Stochastic Indicator are the most oftenly used indicators to confirm a Indices trend.
Indicator-based Basics Trading Strategies
The best type of a trading method is one that is indicator-based. You will find it straight forward to generate the trading signals and 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 Basics Trading Systems :
- Find entry points as early as possible.
- Find exit points securing maximum gains.
- Avoid fake entry & exit signals.
- Proper Indices Equity Management Guide-lines
Accomplishing these four goals will result in a profitable Basics Trading System & a strategy that works.
The last piece of info needed, is deciding how aggressive you're going to be when entering and exiting a trade. Those who more aggressive wouldn't wait until the chart candlestick closes & would enter as soon as their indicators match up. But most would wait until the chart candle of the timeframe they are using has closed, to have more stable signal when entering the stock trading market.
To get huge profits out of the stock trading market you as a trader need to build your own profitable trading system; a method that will bring your not just hundreds but thousands of dollars worth of revenues. You need to have your own strategy which 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 looking for best indices trading systems or for indices trading systems which work, this web site provides you with all the tools required to help you & tutorial you on how to create your own trading systems.
Shown Below is example of a Basics Trading Systems based on RSI, MACD & Stochastic.
Indices System - Basics Trading Strategies
The Basics Trading Systems example above is comprised of four indicators in total, all of these generate trade signals using different techniques, the Moving Average will generate signals using the crossover method shown, the RSI, Stochastic and MACD use different analysis to generate the long & short signals as shown in the above example. How to generate these trade signals is discussed in the next lesson (on the sidebar navigation learn tutorials menu under key concepts).
For beginners who want to create Basics Trading Systems, it's difficult for them to device their own trading strategies since they don't have a lot of knowledge about the stock trading market. However, this web site will explain how one-can create their own free system in just 7 easy guide-lines. The best strategy is one you come up with yourself and learn how to trade the stock trading market with it.
Main advantage of creating your own free Basics Trading Systems is that you will know how to make profits by yourself-and not rely on other peoples efforts.
In the next course located at the sidebar navigation learn lessons menu below the key concepts will show you how to create a indices trading system like that one above, write it's rules and how to back test it on a practice demo stocks account before using it on live stocks account.
4 Examples of Free Basics Trading Strategies
Example 1: The MA Crossover Technique - Basics Trading Strategies
The cross over method uses two moving averages to generate trade signals. The first MA uses a shorter period & the second is a longer period.
Crossover Technique - Basics Trading Strategies
This above technique is referred to as the moving average cross over technique because trading signals are generated when two averages cross above or below each other.
Indices System Example - Short and Long signal Generated - Basics Trading Strategies
A buy signal or going long trade is generated when the shorter average crosses above the longer average (Both Moving Averages Going Up).
A sell stock signal or a going short trade is generated when the shorter average crosses below the longer average (Both MAs Going Down).
Example 2: Stochastics System
Stochastic Oscillator can be combined with other indicators to form a trading system.
- RSI
- MACD
- MAs Indicator
Trading Strategies Example - Basics Trading Strategies
Short Signal or Sell Signal - Basics Trading Strategies
How the short signal was generated
From our guide-lines the short signal gets generated when:
- Both MAs are heading down
- RSI is below 50
- Stochastic moving downward
- MACD moving downwards below centerline
Short signal was generated when all the written rules were met. The exit signal is given when a signal in opposite direction is generated.
Good thing about using such a technique is that we are using different types of indicators to confirm the signals and avoid as many whipsaws as possible in the process.
- Stochastic - momentum oscillator
- RSI - momentum oscillator
- MAs -trend following indicator
- MACD -trend following oscillator
Based on the chart timeframe used this strategy can be used as scalping system when the min charts are used or as a Indices day trading system when hourly charts are used.
Example 3: System Example
This system is fully described within the trade plan on the indices plan lesson on this web site under the key concepts section located on the right navigation menu.
Chart Timeframe
1 H chart
Indicators which spot a new trend
Moving Average Crossover
Indicators that confirm the market trend
RSI
STOCHASTIC OSCILLATOR
Long Entry - Buy Signal
1. Both MA(moving averages) pointing upwards
2. RSI above 50
3. Both stochastic oscillators heading up
Short Entry - Sell Signal
1. Both MA pointing down
2. RSI below 50
3. Both stochastic oscillators heading down
Exit Signal
1. Moving Average gives opposite trading signal
2. RSI generates opposite signal
Risk Management in Indices Trading
StopLoss - 35 pips
Take Profit Indices Order - 70 pips
Reward to Risk 2:1
Example 4: New Gann Swing Chartist Plan
The Gann Swing Oscillator is meant to be used in combination with the Gann HiLo Activator and Gann Trend to form a complete strategy commonly referred to as the - 'New Gann Swing Chartist Plan'. Within this technique the Gann Swing Oscillator is used to help determine market swings for trading only within the current market indices trend is shown by Gann Trend.
Shown Below is examples of New Gann Swing Chartist Plan
Gann Chartist Plan - Basics Trading Strategies
