How do I come up with a trading system?

Beginner Questions
1

I’ve read through the school of pipsology and browsed a lot of the forum, and while I have read of the importance of developing a good strategy, and have read what others use for strategies, I still have no idea how to come up with a good one of my own. I’ve opened several demo accounts to try out different strategies, some based on oscillators, some on SMA or EMA, some on a combination, but none of them end up well.

So what are some good strategies for developing a good strategy? I would imagine that different time frames would require different approaches; perhaps trading the 1 hour or daily chart lends itself to tracking moving averages? Should I focus on shorter cycles on the 5 min chart? I’m sure everyone had a different way of coming up with theirs. What were you thinking when you started it? I’m not looking to come up with a complicated system with ‘guaranteed’ results, I’m just looking to learn the basics so I can create for myself a system that makes me want to keep learning about forex and not chase me off.

2

Why not start by using one of the many excellent and effective systems on the forum. In fact try out several and get used to how they operate over several months and see what suits your schedule, risk parameters and psychology. Why try to reinvent the wheel especially if you are new to this

3

dear dillbilly, i read the school of pipsology, several times. some grades twice and more. dont get discouraged, when i am overwhelmed by all this information i step back focus on what it is i am trying to learn and just take one thing at a time. it sounds silly but the information is there and all through this site. I hope this gives you some encouragement. joanne.

4

[QUOTE=dillbilly;23596]I’ve read through the school of pipsology and browsed a lot of the forum, and while I have read of the importance of developing a good strategy, and have read what others use for strategies, I still have no idea how to come up with a good one of my own. I’ve opened several demo accounts to try out different strategies, some based on oscillators, some on SMA or EMA, some on a combination, but none of them end up well.

So what are some good strategies for developing a good strategy? I would imagine that different time frames would require different approaches; perhaps trading the 1 hour or daily chart lends itself to tracking moving averages? Should I focus on shorter cycles on the 5 min chart? I’m sure everyone had a different way of coming up with theirs. What were you thinking when you started it? I’m not looking to come up with a complicated system with ‘guaranteed’ results, I’m just looking to learn the basics so I can create for myself a system that makes me want to keep learning about forex and not chase me off.[/QUOTE

ok 1st you have to know,\do u wanna to see the money right the way or not ???

here it is
three broader categories:
Long term;
Intermediate term; and
Short term = i love dis one, money right the way…yeah baby

Long term
Yearly Charts (each bar = 240 trading days)
Used for academic studies and tests
Monthly Charts (each bar = 20 trading days)
Used by academics and long-term investors

Intermediate term
using for score trading, swing trading
Weekly Charts (each bar = 5 trading days)
Visited occasionally by swing traders and also used by
some long-term investors. We encourage our traders to
visit weekly charts once per week
Daily Charts (each bar = 1 full trading day)
This is the domain of the swing trader. It is where the
swing trader will spend 90% of his time and get nearly
95% of his entry and exit signals

Short term
using for micro trading
Hourly Charts (each bar = 60 minutes)
Visited by day traders at times to eliminate noise and to gain
a clearer perspective of the overall trend. A great time
frame for 2-day plays
Intra-day (15- & 5-minute trading bars)
This is where the day trader and the scalper live their entire
lives. Nearly all entry and exit points are derived in these
time frames

Then u must know where u are trading at im talking about life cycle

sideway then up trend (1st stage )
up trend (2nd stage good money)
sideway then down trend (3rd stage )
down trend (4th stage ending life cycle)

each stage you use diff strategies, it mean if u dont study price move then
all the strategies will be failed sometime b/c u are not using at right time stage.

good luck

5

It’s not so much that I’m trying to reinvent the wheel as it is that I’m trying to understand how the wheel was invented in the first place. I’ve looked at many of the systems here, and while I’m not opposed to trying them for myself, understanding the thinking that went into making them would be invaluable. I feel like I have a fairly firm grasp of the concepts; I have the vocabulary, if you will, but not the grammar. And like learning a language I understand that gaining a real comprehension of the market will take time, and full mastery of it may never be reached.

6

After more than six months I finally figured out how to make a system (for me).

Ask yourself these questions.
1 When can I trade?
2 How much time can/do I want to spend each day trading
3 What indicators do I like and understand
4 What pair will I trade
5 What is my risk/reward
6 What is my goal

Remember that most systems usually make a profit the first 2 months. Don’t ask why it just is.

Have at least 3 months of profits in a row befor you go live.

The most important part of any system is Money Management

Open a demo with the amount of capital that you have on hand. Do not open a $50,000 demo account if you only have $200 to start with. Keep it real man!

7

Or better yet, why not just open a live $200 account and keep it even realer? lol

I started about 4 months ago in your position and I can say that from what I do know, and I think most experienced traders would agree is that…right now, your going about it the only practical way to find your own way(ya know, it’s normal?)

Through all of these many different types of systems and strategy’s eventually you will find one that you alone can claim as your own. You will know when it comes regardless if your in a live or demo account, you will be quite pleased and have a sense of relief (but don’t rest to easy!)…but you have to give yourself time to read, listen, watch through more information before things strangely start to “pop” into your conciousness…it’s like that learning any new skill.

If it helps, I personally went through 3 different systems before I settled on what I know for a fact to fit my style just right…and no, for the first few months I didn’t know what kind of trader I was, I thought I was one way and turns out I was totally the opposite.

It has only taken me 3 months to find what worked for me, and some would argue that that’s to short of a time for the typical noob. But there’s one problem, I’m not typical…and neither are you.

If you put in 12-16 hours a day study time in this game you will see what I mean, but in the mean time, If I were you starting off from scratch again I would read through alot, ALOT more of these threads, crack open the books and get busy.

good luck to you man and god bless

8

OK thats a good point. Most workable systems that I see are SIMPLE. It is possible and profitable to trade on price action alone. However there are some principles that seem to help. Trading in line with the higher time frames increases your probability since the moves are longer with the trend. If you are a trend trader then trying to discerne the start of the trend (or end) is an important part of the game. Because trend following techniques are lagging (hence following) people will use oscillators of various sorts to measure momentum and get advance warning of a trend change. A ‘typical’ system therefore will often consist of more than 1 time frame, something to measure trend strength (after all you can see the trend with your naked eye) and perhaps an oscillator for momentum