The main focus of this lesson is to guide you through the process of designing your own forex trading system.

While it doesn’t take long to come up with a system, it does take some time to extensively test it.

So be patient; in the long run, a good forex trading system can potentially make you a lot of money.

Step 1: Time Frame

The first thing you need to decide when creating your system is what kind of forex trader you are.

Are you a day trader or a swing trader?

Do you like looking at charts every day, every week, every month, or even every year? How long do you want to hold on to your positions?

This will help determine which time frame you will use to trade.

Even though you will still look at multiple time frames, this will be the main time frame you will use when looking for a trade signal.

Step 2: Find indicators that help identify a new trend.

Since one of our goals is to identify trends as early as possible, we should use indicators that can accomplish this.

Moving averages are one of the most popular indicators that traders use to help them identify a trend.

Specifically, they will use two moving averages (one slow and one fast) and wait until the fast one crosses over or under the slow one.

This is the basis for what’s known as a “moving average crossover” system.

In its simplest form, moving average crossovers are the fastest ways to identify new trends. It is also the easiest way to spot a new trend.

Of course, there are many other ways forex traders spot trends, but moving averages are one of the easiest to use.

Step 3: Find indicators that help CONFIRM the trend.

Our second goal for our system is to have the ability to avoid whipsaws, meaning that we don’t want to be caught in a “false” trend.

The way we do this is by making sure that when we see a signal for a new trend, we can confirm it by using other indicators.

There are many good technical indicators for confirming trends like MACD, Stochastic, and RSI.

As you become more familiar with various indicators, you will find ones that you prefer over others and can incorporate those into your system.