Developing A Forex Trading System

When developing a trading system it is important that your system should be able to identify trends as easy as possible and equally important, your system should be able to avoid you from whipsaws. The following criteria should be considered while developing a forex trading system.
Time frame selection
The first thing you need to decide when creating your system is what kind of trader you are since this will determine to a large extent the time frame to select in building your trading system. Though there is still the need for you to look at the other time frame but the time frame that agrees with the type of trader you are will be the main time frame you will use when looking for a trade signal
Indicators to identify trend
After the selection of time frame there is the need to find indicators that will help in identify a new trend. Trend tracking indicator such as MACD may be used.
Indicators to confirm trend
When we see a signal for a new trend we should confirm it by using another indicator Indicators such as RSI and Stochastic.
Define your risk
It is very important that you have to define how much you are willing to lose. You should decide how much room is enough to give your trade some breathing space but at the same time do not take too much risk on one trade
Define entries and Exits.
There is the need to find out where to you will enter and exit a trade in order to get the most profit. There is the need to stick to your system. Never exit easily no matter what happens even if it appears the market is trading again it you.
How to test your system
The easiest way to test your system is to go to the market chart that accompanied the trading platform your broker gave you access their brokerage. To test the system you developed, simply go back in time and move the chart forward one candle at a time or you can simply view how your system responded to the past market movement when you move your chart forward one candle at a time, you can follow your trading system rules and use that to take your trades.