There are many trading systems and methods for the Forex market. A novice trader can use ready-made trading systems while trading. However, in the process of becoming a trader, sooner or later you realize that you need to develop your own trading system, which will be comfortable for working. In the presentation JustForex gives advice for developing your TS.

1. Guidelines to Develop
Your Own Trading System

2. Hello, dear Forex traders. In this article, we’ll analyze such a thing as a trading system on Forex. We will answer what
it is for and how to develop it properly.
TS allows you to organize and designate specific rules for opening a position. A trader who follows the rules of the
Forex trading system knows exactly where he should limit losses, fix the potential profit, with what trading instruments,
of what volume and at what time to trade.
A trading system (TS) is a set of rules followed by a financial market participant, when he buys or sells assets
on this market.
The trading system performs a certain business plan, which significantly improves the results of the trader. A Trading
Strategy organizes trading, gives a clear algorithm for entry and exit from the position, reduces the likelihood of tilt, and
as a result improves the profitability of a trader.

4. There are many trading systems and methods for the Forex market. A novice trader can use
ready-made trading systems while trading. However, in the process of becoming a trader, sooner or
later you realize that you need to develop your own trading system, which will be comfortable for
working. It does not have to be a strategy designed from a scratch. You can use ready-made and
well-known trading systems (Bill Williams’ “Alligator” TS, “Elder’s Triple Screen” TS and so on),
expanding and aligning them to your own needs.
Let’s look at the basic components of any trading system and the process of its development.

5. Idea

6. An idea is the foundation of any TC. What does the basic idea mean? We know that there can be a
trend, correction periods and a flat on the market. Regardless of market conditions, the main task of any
trader – to enter the market with a positive ratio of risk/profit. The first step is to determine what trading
style is right for a person who develops trading system.

7. Some traders like not to close the order for a long time and to wait for the maximum profit. In this case,
the best trading strategy will be the trend one. Usually, in such a strategy a potential profit is 3-4 times
greater than the risk which a trader takes upon himself. This is due to the fact that most of the time the
market is in a state of the flat. And before a trader will catch the market trend, he can get a loss
several times. If the speculator joins the current market trend at the beginning of its inception, he will
be able to close the previous losses very easy and make a good profit.

8. There are traders who enjoy a more active and risky trading. Usually, they open transactions
in the direction of the current trend, as well as of the countertrend. In this case, the ratio of
risk/profit may be slightly lower, approximately 1/2 or 1/3.

9. When the market is in the flat, it is best to trade from key levels of support and resistance.
When the price reaches the upper/lower limit of the trading range, it is necessary to
consider the transactions in the opposite direction.

10. Trading
instruments

11. A trader should know exactly what assets and tools he can use in his trading. Usually, the currency majors:
EUR/USD, GBP/USD, USD/JPY, USD/CAD, AUD/USD, – are traded on the Forex market. These trading instruments
are the most volatile and liquid.
At the same time, the foreign exchange market has non-standard trading tactics and techniques. For example,
trading on swaps. Such a strategy is called Carry Trading. In this case, the choice of a trading instrument will depend
on the interest rates on foreign currency loans.

12. Trading sessions
and timeframes

13. The trading plan must contain the specified timeframes, to be used for the analysis of the market situation. A
trader should also exactly know which trading sessions are effective for his trading style.
The best way is to analyze the market using multiple timeframes. It is better to identify the global market trend
at the older periods of time, for example, H4-D1. The confirmation and entry point into the market should be
looked for on smaller timeframes.
The most active trading on the Forex market is held during the first half of the European and the US trading
sessions (10:00-20:00 GMT +2:00). Intraday traders should trade during this period. If a speculator uses a
medium-term trading (H4-D1 timeframes), it is sufficient to check the charts several times a day.
Regardless of trading style, the current market situation should be analyzed on several timeframes.

14. Entry and exit
from the
position rules

15. Risk management is the most important component of any trading system. Most successful traders say
that the correct control of risk is the key to success in stock trading.
You should always bear in mind that the Forex trading is, in fact, a trading of probability and
expectations. There are both loss-making and profitable trades. The most important thing is to follow
the rules of the trading system and open positions with a positive mathematical expectation. I.e. our
potential profit must exceed the potential loss in several times (1:3; 1:4).
The basic rules of risk management are:

17. Risk level

18. Your trading system should contain the rules of entry and exit from the position. A trader should know exactly
how he will analyze the current market situation and make a decision to enter the position. The most common
analysis tools include indicators, technical analysis figures and Price Action patterns. Be sure to take into
account the news factor.
A speculator must specify in his trading plan the level of risk which he is willing to take over, where the
protective orders will be located and how he will close the potential profit. A trader can use as a fixed take
profit, and a multiple trading. In such a trading way the entry into the position is made by several orders.
Profit-taking is made by parts with the use of a trailing stop.
A speculator must always adhere to the “golden rule” in trading – our potential profit should be several times
greater than the risk that we take upon ourselves.

19. Never risk all the money
in one transaction.
Losses limit for the 1 position
must not exceed 2%
of a trading capital.

20. The potential profit should
exceed the risk
in several times.

21. Always use
protective orders.

22. Follow closely
your trading plan.

23. Do not be greedy.
Fix income according to
the rules of your
trading system.

24. Thank you for
watching
the presentation!