What are the steps to creating your trading system?

In order to create a perfect trading system, you either need to search through all of the internet and buy the best one you can possibly find or you can make one of your own. And just like in the difference between restaurant and home cooked meal, the latter one is always going to be more to your liking that the one made by someone else even if it does cost an awful lot of money.

And just like with food there is a certain recipe and certain steps that you can follow in order to make your trading system perfectly seasoned and working just for you. In total there are 5 steps that you can follow:

№1. Time frame.


For the first step you are going to have to determine whether you are a day trade or a swing trader. What did those video lessons teach you?

Are you going to trade according to 1-hours, 1-day or 1-week chart? What time frame is the best for you?

№2. Identify your type of indicator.


It has been a long while since we have been talking about indicators but you still need to remember everything about them. There are so many of the indicators which can help you see a formation of a new trend as well as the end of it.

But do not forget – there is no need to overload your chart with indicators – two or three are more than enough.

№3. Define the risks.


You need to understand how much of a risk you are walking into. How probable it is that you are going to lose? What are the chances for the win? If you lose – how much can you spare? All of that is supposed to be worked out before you go into the trade.

№4. Find entry and exit points.


Understand and define you perfect point for entries and exits. There are several ways that you can take to approach the search and my advice is going to be – try all of them – from hitting close to a candle to using a special indicator – whatever you are going to choose it has to be working for you.

№5. Write it all down.


Do not forget to document your system and your progress in perfecting it. After all you are going to have to follow it do the last dot. You can’t afford to lose any of your thoughts and your progress.

And there you go – a perfect 5-step-approach system/recipe for a perfect trading system.