How to Create a Good Trading System

If you want to make or to create a trading system to trade for, then you need to learn about support and resistance system, because support and resistance have a recurring nature as a foreign exchange trader within making a trading system. If there are strong support and resistance inside the current fluctuations, this can bring forex traders to accurately set their trading position, analyze trades, and setting their target/risk areas.

In this post we are going to learn how to determine support and resistance levels correctly so that we can start plot our trading position using our system.

Price action system

There are so many foreign exchange traders use price action to get good initial when determining support and resistance levels. As we already know that the forex market has actually moved this point at those certain areas.

For example, when we analyze that the market price has reversed off certain level on a currency pair, then we can sure take this level had reflected off that area because on this level was touched, the number of bearish in the trading market bigger than bullish for many of reasons.

Actually that the market price had reversed off of this trading level simply levels out to us that the foreign exchange market resisted at this trading level.

If you can get that a retracement level using Fibonacci indicator, or maybe a pivot area were at this level then you can make sure that level of resistance to get impact in that it could be analyzed resistance level.

What is psychological levels?

Generally we think in round numbers, for instance : when someone want to know how much I paid for my cellphone then I would use a round number. Rather than say 22,321 I would likely to say 20,000. Generally we use the simple value, we round the number. This also happens in our trading activities as well, a lot of foreign exchange traders will take set stop loss or limits their target at the round number!

And the stop levels or limit targets that take spotted at the round numbers can most certainly impact order decision, it mean that when the market price is moving bullish to a strong area of round number resistance, enough stop loss orders can be touched. Generally we take prices ending with 00 on many pairs. Not every trader of round numbers will work as strong support or resistance.

Using Fibonacci indicator in our Trading Strategy

Maybe there is no area has seen more accurate analyze in its usage in forex technical than fibonaccy system. In Fibonacci we will find many studies, but for target of this post we are going to concern on this Fibonacci tool.
To attach a Fibonacci tool, we should only to analyze a trend. Many trading platforms have Fibonacci tools inside. This tool then will analyze levels at chart. The market price with which these intervals are shown will be reflected of as support and resistance levels.

Forex trend trader will use these levels to analyze the current trend, searching to get in the trade in the main trend direction. In other words, the foreign exchange trader can analyze the trend on the trading chart properly. As the market price reverse to these Fibonacci levels while the bearish trend is being reversed, the forex trader can find to a trading position in anticipation of the bearish trend reverse into force.

Pivot Point Trading Strategy

In forex trading there are many system of determining pivot points and this is a method of support and resistance that can be used to enhance the forex trader’s target. At this part, pivot point are calculated based on past data that can bring to potential support and resistance

Pivot points can be analyzed on any time frame chart, but usually the bigger time frame chart the more pertinent the level. The weekly pivot point data are considered to be strong support and resistance level than hourly data. There are many kind of calculation of these pivot levels, such as camarilla, which is usually used by traders as they use another math calculation that gives pivot levels much accurate to the current movement.

Well, it depends on our trading system. None of the support and resistance levels can bring predictive level, each part is just a possibility that we can not to define until the trade is finish. But in other side, these support, resistance, and pivot levels can assist forex traders make their proper trading system to trade with analysis, searching to define risk and reward level.