Create Your Own Trading System

In developing your own trading system you should have goals for your trading system. Your goals should have these two important things:

1. Your trading system must be able to determine the trend as early as you possibly can.

2. Your trading system must be able to avoid you from breaking into two. That means going broke.

If you have established a good trading system with these two important factors then you will become a successful trader in no time.

The following are six steps in creating your own trading system:

1. Time Frame

Identify what kind of trader you are and then identify your time frame as well. Determining your time frame can be a very good help for your trading business.

2. Look for indicators that can help you determine a new trend

Indicators can be of such help for you to find a new trend. One of the most famous indicators that many traders use is the moving average, this help traders determine a trend quickly and take advantage of it.

3. Look for indicators that confirm the trend

Traders must be aware of false trends and to be able to help them they need an indicator that helps them confirm the trend.

There are many reliable indicators such as Stochastics, MACD and RSI.

4. Identify the risk you are taking

Before the trading begins you must be aware the amount of money you might be losing in this business. Not all people are open when it comes to talking about their losses. Nevertheless, you must be able to determine the level of risk you are taking.

However, money management still plays a vital role in taking your risk into minimum levels.

5. Determine your entry and exit points

Next, determine where your point of entry and your point of exit are. This is very important in making a trade.

Some traders like to enter the trade sooner than others, after they have finally identified with their indicators and after they have accepted the signals. While others like to enter a little bit late rather than rush into a trade.

Your style in trading will determine your entry and exit points. Some traders are aggressive when it comes to trading while others want to take it more slowly.

6. Have your system rules written down and stick to it.

After planning your trading system have it written in a way that you will never forget it and then you must follow your own system. Stick on what you have written, one of the most important thing about being a successful trader is being disciplined.

Being disciplined means sticking to your trading system.

After having your system done, you must record all your trading transactions. Your losses, wins, average win and average loss. By having these records you will keep track of how successful your system is. You will know if you are having good system or not and can then adjust your system accordingly.