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How to Generate Stock Trading Signals With Stock Trading Systems

Stocks MetaTrader 4 Signal Indicator

The only method of stock trading is through stocks trading signals, It is best to learn how to generate these stock signals for yourself, this way you do not have to rely on other stocks traders to generate them for you.



Generating stock trading signals is not easy and requires you to have a lot of stocks trading analysis knowledge and experience, but the earlier you start practicing how to generate these stock signals for yourself the better it is for you.


A good method of how to practice generating stock trading signals with stock trading systems is to open a free practice Stock demo stocks trading account and test your stock trading signals on this practice account risk free without risking your money, then once you have tested your stock trading strategies and they are profitable on the stocks trading demo practice account you can the use these stock trading signals on a live stocks trading account.


The method of how to practice generating these stock signals as well as how to back test the stock trading signals on the demo stock trading account using the MT4 stocks trading platform is discussed below:


So, How Can a Trader Generate Stock Trade Signals?

The best method of generating stock trading signals is through stock trading systems, You can Learn how to come up with stock trading systems from the lesson how to create Stock Trading Systems on the right navigation menu under the topics Stock Key Concepts.


A stocks trading system is a combination of one or two or more stock technical indicators with written stock trading rules of how these stock indicators will generate these stock signals.


Take an example of the simplest stock trading system or stock trading strategy known as moving average crossover stock trading method. A buy stock signal or sell stock signal is generated when there is a crossover of the two moving averages; either a buy stock signal for an upward moving average crossover or a sell stock signal for downward trend.

Example of Generating Stock Trading Signals Using Moving Average Crossover Method

Generating Stocks MetaTrader 4 Free Signals - Stocks MetaTrader 4 Signal Indicator - Stock Trading Signals MetaTrader 4 Stock Indicator Strategy Moving Average Crossover Method



The stocks trading system example explained below shows a stock trading system using the above moving average strategy combined with the RSI and MACD stock indicators to generate buy and sell stocks trades.

Example of Online Stock Trading Systems and Stock Trading Strategies
Example of Generating Stocks MetaTrader 4 Free Signals - Stocks MetaTrader 4 Signal Indicator - Stock Trading Signals MetaTrader 4 Stock Indicator Strategy



When it comes to generating buy and sell stocks trading signals, stocks traders should use simple stock trading systems to generate these stock signals.


Generating Stocks MetaTrader 4 Free Signals

Generating Stocks MetaTrader 4 Free Signals - Stocks MetaTrader 4 Signal Indicator - Stock Trading Signals MetaTrader 4 Stock Indicator Strategy - Buy and Sell Stock Trading Signals



Stocks MetaTrader 4 Signal Indicator

An example of a simple stock trading system that works, is one that is a combination of:


  • Moving average crossover strategy

  • RSI

  • MACD


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The written stock trading rules are:

Stock Trading System Examples

Generating Stock Trading Signals Strategy - Stock Trading System Examples



Stock Trade Rules:



Buy Stock Trading Signal is Generated when:



  • Both Moving averages going up

  • RSI value above 50

  • MACD above center line


Sell Stock Trading Signal is Generated when:



  • Both Moving averages going down

  • RSI value below 50

  • MACD below center-line


Example of a Stock Trading Strategy

Generating Buy and Sell Stock Trades - Example of a Stock Trading Strategy


Exit Signal


Exit signal is generated when MA, RSI and MACD stock indicator give a signal in the opposite direction.


The stocks trading chart time frame to use is 1 hour stocks trading chart time frame or 15 minutes stocks trading chart time frame depending on what type of stock trader you are.


For a beginner stock trader the above written stock trading rules will give good buy and sell stock trade signals, the only thing that a stock trader needs to do is to have the discipline to follow the written stock trading signals rules the exact way they are, and wait for a buy or sell stock trade transaction to be indicated by your stock trading strategy and trade after the signals have been generated, not before they are generated.



Back Testing

Generating Stock Trading Signals with a stocks trading system is one of the easiest method to trade stock , it is the best way that a stock trading beginner can attempt to determine the direction of the stocks trading market stock trend with a good level of accuracy, and with a little back testing on demo practice account so as to gradually increase the level of accuracy of this stock trading signals strategy


The best way to back test a stock trading strategy is by following these two steps:


  1. Stock Paper Trade

  2. Stocks Demo Trade


Stock Paper Trading- This method of testing a stock trading system involves placing your stocks trading system on the stock charts, then take the stock chart back to a particular date, 3 months back for example, and then using this stock chart history to determine where your stock trading strategy would have given buy, sell and exit stocks trading signals. Write down these points and the profit per stock trade transaction on a piece of paper and then calculate the total profit after you have recorded a good number of stocks trades such as 50 paper trades stock trading transactions and determine if your stock trading method is overall profitable, the win ratio, the loss ratio and the risk:reward.


This is an ancient method of testing stock trading systems that was used by traditional investors when there was no online stock markets or computers for that matter, the stock trader would use something like the A3 or A2 paper, graph format paper and draw the trading charts manually (Imagine plotting the charts on your stock trading platform by hand every day or every hour, would you be ready to do that? I doubt) Those investors were hardworking than most, some were so used that they still continue to paper trade the online stock market and draw the stock charts on paper, anyway for our paper method example, just a sample data of 50 stock trade transactions is all we need.


A good stock trading tool to use to back test your stocks trading system is known as the MetaTrader 4 Stock Trading Step by Step Tool. Found on the MT4 stocks charts toolbar of MetaTrader 4 stocks trading platform, If you want to find the stock charts toolbar on the MetaTrader 4 stocks trading platform it is at the top of the MetaTrader 4 stocks trading platform. If it is not: Click View (next to file, top left corner of MetaTrader 4)>> Toolbar >> Charts. Then click the Customize button >> Select Stock Trading Step by Step >> Click Insert >> Close.

MetaTrader 4 Stock Trading Platform Chart Tool Bars - How To Trade Stock For Beginners


Stock Trading Step by Step Button for Back Testing Stock Trading Systems Explained

MetaTrader 4 Stock Trading Chart Tool Bars - Stock Trading Step by Step Button for Back Testing Stock Trading Systems Explained



Once you get this MetaTrader 4 stock trading tool you can move your stock chart backwards, and use this MetaTrader 4 stock trading tool to move the charts stock trading step by step while at the same time testing when your stock trading system would have generated either a buy or sell stock trade transaction, and where you would have exited the stock trade transaction, then write down the amount of profit/loss per stock trade transaction and out of a sample number of stock trading transactions you would then calculate the overall profits/losses generated by the stock trading strategy.


If your stock trading strategy is profitable on the paper then, it's time to demo stock trade and testing if the it is profitable on the real market as it is on paper method. This is the process of testing or back testing a stocks trading system.


Maintain a Stock Trading Journal to keep track of profitable stock trades, and determine why these stocks trades were profitable. and also keep a log of all losing stock trades, determine why these stocks trades made a loss and the avoid making these same mistakes the next time you trade using your stock trading strategy.


Tweak your stock trading system until you get a good risk: reward ratio, with the stock trading signals that you generate. Aim for a good risk: reward of 3:1 and a win ratio of above 70% is a good ratio, with good stock trading money management even a stock trading strategy with a win ratio of even 30% i.e. less than half of your stock trading transactions make profit you can still make a profit. You might want to read this topic to know what the table below is all about: Risk : Reward Ratio.

Stock Trading Strategies Explained

Risk To Reward Ratio Chart of Stock Trading Money Management Strategy - Stock Trading Strategies Explained



Read Stock Trading Money Management Strategies Tutorial


A manual stock trading system is still the best way to generate stock trading signals compared to automated stock trading systems, a manual stock trading strategy is a better method and is also much simpler to implement.


However, other traders prefer automated stock trading systems and for those then they can check the information on this page MQL5 Stock Expert Advisors and automated stock trading systems.


You can also view our extensive list of stock trading strategies topics that provides you with various methods of buy and sell technical analysis using a number of diverse technical methods, navigate to the Stock Trading Strategies Section.

 

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