Hello,
I’ve been reading some Forex books and people keep mentioning a “system”. And that the best system is the one you create. I’m a bit slow and I’m still not completely sure what they mean by system. I think it just means it’s the way you trade based on your time frame, an indicator set to some settings if you use an indicator, and what your risk/reward is. Does that sound about right?
So, let’s say that I have a full-time job and I can only trade the 4-hour or daily chart. A lot of the books I’ve read suggested using a higher time frame if you’re starting out. That’s great, but it’s also really slow. I still don’t quite get backtesting yet so I’ve been front testing with a demo account… I just placed a trade a few days ago and I’m still waiting… .looks like it will be a while… should I trade the smaller time frames just to get a sense of trading? And if later I decide to trade smaller time frames, does this mean I would have to change my system?
Sorry for the dummy questions. I’d really appreciate your help. Thanks!
My suggestion is, practice in demo with the lower time frame and if you get good result only then go for live! Don’t go for live trading based on others opinion.
If you can’t trade in time-frames lower than 4 hourly, don’t worry right now about how you would do it. Focus on the dailies. Pick up a basic system or strategy and get to understand the rules on demo. No reason to go live until you have both a system that has been shown to be workable and a track record that YOU can work it.
Very simple systems are stuff involving a buy signal in an uptrend with a bullish indicator. So, stuff like, buy the first close above the MA if the indicator X or Y or Z is also bullish and the chart shows an uptrend for at least the last 10 days or whatever. Put a stop either below the signal day’s low or below a swing low in the uptrend depending on how long you want to stay in. Put a TP the same distance above if you don’t want to be in for longer-term price rises.
Temperamentally, some people feel uncomfortable buying when price has been rising, and they prefer to sell when they see signs of an uptrend reversal (or even if they don’t). They will not be told that following a trend is easier, but you need to work out which type of trader you are.
Ah yeah, that confirms what I’ve been thinking a system is. Thanks. I guess I’m too new to see how someone would make their own system. When you get more advanced, do you use more than one system?
I create my system when im monitoring 1m candle 12hours daily,
Then i make Rules for Buy and sell thats suited my personality
And the most appropriate SL for rules buy and sell
I have 2 condition for buy and sell as well,
My system have Soft SL which is ,if 1m candle close at certain price and hard SL like other people as usual
A system is just a set of rules. You make observations of the market, and form hyptheses as to what follows what. When and what you decide to trade, long/short, entry/exit, etc are properties of a “system”. Some people might like to be picky about a strategy vs a system, but at the end of the day they’re the same thing. They govern how you trade.