OK, a system. This time we'll talk about how to trade repeatedly and
running in consistent profits from day to day. In trading, they are
experiencing profit was definitely will return to open other trading to
get bigger profits. There are people I meet who say that when it's a
non-profit so percent in forex then he will soon end his trading and was
satisfied enough with the profit that's it. I personally do not fully
believe such words. Because if we are experiencing profit we will surely
come back to repeat the same profit right? Just a lot of loss the Wong
back to try trading again (out of curiosity) much less profit?
The
issue is if we are first in trading profit, not necessarily we're
capable of doing it for the second time. Our goal isn't to play forex is
a non-profit, and maintaining consistency of profit us? Well for that
you need a trading system that is able to at least help you earn a
profit trading consistently. That is why it is necessary to make a
trading system.
A trading system is a method of trading both
fundamental as well as technical ones are able to lead us trade in a
variety of market conditions and of course generate profit.
If
you make a searching in Google with the keyword "forex trading system"
then you will find lots of search results. Many of them offer a perfect
trading system and is capable of giving you a profit of hundreds of
points per month! In the world of forex system like this is called a
"Holy Grail." A term that refers to a method of trading which when
implemented in accordance with the rules will give us a profit in every
circumstance.
Doesn't that look attractive? A trading system
that is capable of giving a profit of hundreds of points per month and
will be the gold mine you forever! Some offer prices thousands of
Dollars for this kind of model trading system. What deserves to be
purchased? Isn't it true that if I buy so I can trade with the system
and break even after several months of trading?
Hehehehe, one
thing I learned when surfing the internet and reading so much knowledge
is how to distinguish a language with the language of marketing
information. Most languages marketing looks too good to be true.
Advertising and trading system like that it feels too good to be true.
Isn't it true that if a trading system generate, without even having to
sell it though the creator is able to generate thousands of Dollars
every month? Why should I bother to serve buyers, if only by following
the creation of the system he's been able to be rich?
Suppose
the system correctly, the hardest thing about a trading system is not
how to make it but how do we follow it with discipline. This is not an
easy matter what else if it turns out the trading system that you
purchased requires you to trade between 00.00 – 03.00 every day for
example. What You can afford? Wake up the Middle instead every day and
looking for opportunities for the sake of trading system that you have
purchased for a few thousand dollars. It's only a matter of time, yet
the problem like other innitial margin (initial capital),
model trading (swing, day or scalp) and others.
The good news is we can make our own trading system! And because we make
the trading system itself must be in accordance with the pattern and
characteristics of our trading. Better isn't it?
This article
will help you for that. Create a trading system continue to light is
indeed easy-easy easy easy easy-that is to say eh. Especially the
problem back test and forward testnya. That is to say it was mengtes
back test trading we do profit against price movement for this to
happen. While the forward test is test it in the demo account You
. OK then let's describe one by one how to create a trading system.
Step 0. Determine the purpose of your Trading (Trading Objectives)
out there should be goals. Any investment should have a purpose. But
don't tell your goal in playing the forex is the highest possible
profit. Goals should be realistic and have a clear size. Realistic
meaning in accordance with the capabilities that we have today. Clearly
this means that must be contained in the figures or percentages and in
particular time as well. It will be better again when in the form of
personal targets such as being able to buy an underbone costing 12
million within a period of 8 months. Well it's the new name clear goals.
Determine the goal in forex trading helps us to determine the
ways in which trade and capital that we instill. Well then how do we
determine our goals?
First you need to know is does not need
to be too pompous in determining your target audience. Let's say only
10% every month for example. It's been quite good. If you consistently
achieve 10% every month for a year then you are able to acquire as many
as 120% that is 12 times larger than our annual deposit rates! If You do
not want to use exact numbers but a percentage, it's a legitimate
course. How much is it? For example, 12 million for eight months as an
example of the above underbones. For just 12 million with 8 months so
your monthly profit was to be 1.5 Million every month. For more with 20
days because the forex market is open 5 days a week and a month there
are 4 weeks so a daily profit you have to achieve is 75 thousand Rupiah.
It means that with the opening of the position of the GBPUSD as much as
1 lot, you should get just as much profit amounting to 9 points each
day. This number is retrieved from the price movement of the points is 1
1 $ and Rupiah exchange rate at the time of this writing is $ 8,600
made per Dollarnya. Not too hard right? Well with consistency as much as
9 points each day, you are able to buy an underbone for beloved wife
after trading for 8 months. Isn't that a pleasant enough?
But
remember the lessons of risk to reward ratio in money management class
we some time earlier. Each opening position means it is also possible
the loss ratio can occur. Well that must be considered in our trading.
Yet in reality every time trading is not always we gain profit right?
Within 20 days of the month may we experience 5 days or even 10 days
where we touched the Stop Loss so that not only the profit not reached
but also reduced our capital.
so feel complicated huh?
Hahaha, don't worry, it's not my goal to be difficult for you. Make the
purpose of trading (trading objectives) can indeed tremendously
complicated if you want a very detailed target profiles but can also be
enjoyable as build your dreams when done with proper and simple course.
Now we return to the risk to reward ratio. In determining the trading
objectives, you must also specify the responsibility you are willing to
risk per trade. In any transaction, how much loss you want
responsibility? Now let's say Your profit target last was 9 points per
day. If you want a ratio of risk is the same then it means that you
should put up Your Stop Loss of 9 points as well. And the bad news
because of your target audience should get underbone costing 12 million
dollars for a period of 8 months then you should not even the loss in
each of your transactions once you place a Stop Loss or target will not
be achieved.
Hggh ... it's impossible we never loss instead?
Well to provide extra space for the sake of duck and motorhome
terbelinya of the possibility of loss in some trade then there are
several ways that can be done.
The first is to increase your
risk to reward ratio you with a comparison of reward must be greater
than the risk. Raise the so 2 times so Your profit target (TP) to 18
points and Stop Loss (SL) the value fixed IE 9 points. Thus even if you
lose as much as 10 times in every month from 20 times the trade then
underbone still can be obtained. The following detail calculation per
day.
The destination table Trading, Risk to reward ratio = 1:2 & profit to loss percentage per trade per month 1:1
Month
| Profit (points) |
Loss (points)
|
Total (points)
|
Month 1
|
360 |
180 |
180
|
Month 2
|
360 |
180 |
180 |
Month 3
|
360 |
180 |
180 |
Month 4
|
360 |
180 |
180 |
Month 5
|
360 |
180 |
180 |
Month 6
|
360 |
180 |
180 |
Month 7
|
360 |
180 |
180 |
Month 8
|
360 |
180 |
180 |
| GRAND TOTAL |
1440
|
Well at least the target still more ok to be achieved. If you feel the
SL of 9 points is too small for you, Please enlarge Your SL but to
compensate, enlarge Your TP is also making it a draw. The ratio of the
30 points the SL and TP 60 points it felt too good and frankly I feel
more in tune with the SL: TP = 30:60 points. With per risk to reward
ratio of 1:2 and SL: TP 30:60 as well as the percentage of profit: loss
in a month still 50:50 then your trading results in the 8th month was as
follows:
| Profit (points) |
Loss (points) |
Total (points) |
| Month 1 |
600 |
300 |
300 |
| Month 2 |
600 |
300 |
300 |
| Month 3 |
600 |
300 |
300 |
| Month 4 |
600 |
300 |
300 |
| Month 5 |
600 |
300 |
300 |
| Month 6 |
600 |
300 |
300 |
| Month 7 |
600 |
300 |
300 |
| Month 8 |
600 |
300 |
300 |
GRAND TOTAL
|
2400
|
If so wouldn't it be nice that we enlarge the ratio of keep because thus
the distance of SL gets bigger so that at least the analysis will be
more easy and of course profit is also getting bigger? Wait a minute.
Remember we've been discussing the matter of maximum drawdown in a class
of Money Management? Well if 10 times the loss of 300 consecutive
points that occur in your trading and it was only on the 11th trading
profit is achieved if our capital is adequate? Well this is the
intersection between the two. The greater your capital is of course the
point of SL and TP can also be larger. However, for a ratio of SL: TP =
30:60 and the percentage of profit: loss per month is the same 50%: 50%
it feels capital $ 1000 is already sufficient.
Step 1. Determine the type of your Trading
Discussion this
time was to determine how Your trading type. If a scalper or a day
trader or swing trader? This will be closely related to forex charts you
use primarily about time frame.
Let's say you have determined
your trading objectives namely of 180 points sebulannya (back on the
target above the underbone Honda Tiger please search yourself how) then
you need to determine how your trading pattern in the future. Subject
what is swing, day trader, scalper and already we discussed in some of
the previous classes in all schools of our dear forex
. If you
are a Swing that is not necessarily a one day open a position then of
course can not be made targets in a break per day. Is wiser to breaknya
per week or even per month. With monthly then your net profit target
into 180 points. To day trader what else it feels like you can discuss
the scalper-break into a table like the previous day above.
Well what type of trading are discussed in diingin and its relationship
with Your trading system is a matter of the graphs that you will use in
your technical analysis.
Usually a trader using a 2 time frame
in the graph forexnya. The first graph is to determine the trend is
happening (confirmator trend) and usually these graphics using a larger
time frame. While the second graph is a graph to do entry (entry
confirmator) on the market so as to use a smaller time frame. Of course
the definition of great small time frame here varies depending with your
trading type.
If you are a Swing Trader then you can't use
the chart time frames per 15 minutes or 30 minutes. To analyze the trend
usually a swing trader use the time frame 1 d aka daily. This means
that one candlestick represents the movement of the price for 1 day.
We've been discussing what that time frame at the moment we are studying
candlestick
far in advance. To do an entry on a market is
usually a Swinger uses the 1-hour time frame in the graph forexnya. The
movement of under one hour to be classified "whipsaw" for them. The term
itself is a Whipsaw in forex traders that less is more is the movement
of the currency just to cheat or not showing the actual trend.
Look at the image above. The part that was given a red circle is an area
that is said to whipsaw (jagged like a saw). If one computer screen we
have only seen the whipsaw area then this thing often outwit us to see
the trend globally. It is possible that whipsaw in the chart shows the
direction down while major graph shows the direction of the Board. Well
this could be deceiving us.
Keep in mind any time frame you are
using whip saw is always there. Magnitude can vary from each time frame.
However, the smaller the time frame that you use, the more whipsaw that
appear in Your forex charts. So, watch out!
For a scalper
could be a whipsaw day trader is in the major trend for them. Profit by
30 points means a lot for them as for a swing trader 30 points is simply
a whipsaw and by no means
. Then how about day trader? Well
day traders usually use time frame 4 h to determine the major trend of
them. For the execution of those accustomed to using the graph of 15 m
or 30 m (M = minutes). Thus they will take profit is not as much a
swinger but because it uses a smaller time frame then the opportunity to
open a position far more and profit ever so
more often.
Furthermore, the latter a scalper. In General a scalper uses the time
frame 4 h or 1 h to determine the major trend of them. For execution or
determining entry, they used to use a time frame of 10 or 5 minutes.
Well, customize with your trading pattern. The obvious magnitude of
above is not something that is absolutely for you to follow. If you find
it to be a day trader can also use time frame 1 d to determine the
trend is happening ya sah-sah saja. The origin of course don't use time
frame 1W aka one week.
OK, let's look in the form of a table:
|
Trading Type
|
Trend Confirmator
|
Entry Confirmator
|
Swing Trader
|
1D
|
1h
|
Day Trader
|
4H
|
15M or 30M
|
Scalp Trader
|
4H or 1H
|
10M or 5 M
|
To facilitate our discussion, let us assume the front side is a day
trader who vied for underbone costing 12 million within the next 8
months as explained above. Well for that we will use graph 4 h and 15 m
for our daily trading. Next we must determine our fundamental and
technical indicators to make our own money machine!
Step 2. Determine technical and Fundamental Indicators Tools
Ok, talk back in the trading system, surely you must know how to do the
analysis and gain profit from there. At the very least you need a
technical and fundamental indicators to predict 2 things here:
know the trend is happening quickly and accurately
the right moment to do the
entry
to be able to find out 2 things above, of course, fundamental and
technical analysis plays a role here. First you need to determine is
Your technical indicators. While choice is fundamental for not much and
simply added later on a our trading system.
OK let's get
started. It can be said it is the engine of Your trading system. The
first to be able to know the trend is happening, we must use a larger
time frame and specific indicators to be able to measure it. Why not use
a smaller time frame? The smaller time frame would be more effective if
we use it as a determinant for entry. Even when we use a smaller time
frame, we can get caught up by the whipsaw of price movements in the
future.
Like the original deal that we assumed it was a day
trader if so time frame to determine the trend is happening is the graph
4 h
. To be able to determine the trend is happening on a
graph we will use 2 indicators. One for the indicator trend follower and
another one is an indicator to determine Overbought and Oversold. You
don't want to experience that the trend is going turn out soon coming to
an end right? Well for this we have to add the Oscillator
.
For trend indicator, we will use the Exponential Moving Average as an
indicator of trend follower. And to determine areas of OB and OS we use
the Stochastic Oscillator.
3. Determine the Quantity Limit and Stop Loss
Ok, this is
not difficult. There are only a few simple tricks which we will use
here. The first is the problem of the Limit. Because we are targeted as
much as 180 points sebulannya then at least target profit per trade must
be as big as 9 points (assuming one day one time trading). But it was
like 9 points is not too feel and yet again we should consider longer
market conditions, holidays, or risk to reward ratio.
But I
have a much better idea to determine when we should do profit taking.
Profit taking at the Open Buy only will we do when XMA on 1 h shows the
trend down or William's%r in 1 h area-up to 100-50.
Stop Loss
it's like 30 points suffice. We can not use Stop Loss too small due to
whatever price requires a range sufficient to perform the movement.
Should not be too small so blocking the price range of motion but also
should not be too big that makes the loss we felt pretty "painful."
If you don't have passion for profit schemes taking the variables so
you can replace them with 60 points and thus risk to reward ratio You be
1:2. Oh yes, you can just shift Your Stop Loss when profit was earned.
For example, if using the system above, we've gained a profit of 30
points since the open Buy GBPUSD at 1.9850. Now the price has been at
1.9880. You can shift Your Stop Loss at the point of 1.9850 initially at
1.9820 in order to maintain the possibility of price reverses
direction. Thus if Your SL touched even if no loss going on.
4. Do a Back test.
OK let's see the system we have made at some existing candlestick
charts. You can also do back other test to make sure that the system
that we just created this joint goes well in a variety of conditions.
Back test (and also the forward test) requires time and is not easy.
Loyalty required in doing so. We expect this to be a PR you do to test
the trading system that we just had borne with.
It is good to
perform a back test and forward test your trading system within the
period. You are welcome try forward test platform Gain Capital for 2
months to find out that the system that you wake up quite accurately and
consistently.
Step 5. Do Your Trading System and comply with
Ok we already
create a trading system. Not bad for a beginner forex. And you've
probably already tried it several times in Your demo account. Promising
looks like isn't it?
The final step when you learn that the
trading system you have created profitable is to run it with discipline.
Indeed it seemed sound stupid if we don't run well a system capable of
giving us profits consistently each month. But the fact is the case.
There are more difficulties to run a trading system with discipline than
to make it. That is true.
The main cause is a question of
psychology. Sometimes a novice not patient enough to determine
objectively that the prices actually being in the trend down or vice
versa. Patience can prevent You making mistakes-mistakes that
is not necessary. O Yes before we move on to the next class, you can
always create a trading system for yourself whenever you want. What is
exemplified above is not a guarantee of profit or exact formula. Out
there there are so many traders who created a variety of secret formula
for their trading. You can make it yourself! Or you can modify the
example above to later create a trading system that is better than our
article this time. If better be okay-You send them to us. Who knows it
may replace this article.
