During the last few months I have been building a variety of trading systems that are created by employing a set of very simple trading indicators. The good thing of it is that a number of them are incredibly successful as well as simple to use. A few days ago I back tested a collection of free Forex software tools that have made an overall total of 185% in the last Twelve months by trading only 1% per trade.

I actually found this trading strategy when I was testing a lot of Forex indicators and trying to find good combinations of lagging and leading indicators. After testing about a hundred of them I was able to find a collection of indicators that was in fact making profits.In this post I will be trying to explain to you 4 simple tips on the best way to also create successful trading systems that can be make 180% ROI and more per year.

Look for a combination of indicators that makes sense:

When you are searching for new trading systems you will have to look for indicators that work well with one another. As an example, I usually use a combination of lagging and leading indicators.

Why? Because I want to have the capacity to take advantage of the early signals some indicators provide along with the confirmation signals indicators such as RSI can provide.

Also, I always make sure that the signals I am receiving from my set of indicators are not too weak. The best way to measure the strength of a signal is by forward testing it (with a demo account, never with real money) and evaluate the way they perform.

Combine indicators that can measure the strength of the movement and another one that verifies the market’s intention:

This is a very important part when you develop a trading system. If you only use indicators that measure the strength of the market it will be difficult to determine when to enter the market. On the other hand, if you only use indicators that help you to determine the market’s intention (for example: the market is about to go in an uptrend or a downtrend.

Backtest the trading system for at least 12 months:

Backtesting is the only way to confirm that your trading system actually works. Lots of strategy developers and investors commit the mistake to simply back test a trading strategy for a few months or weeks. This is a severe mistake because anyone who has been trading for a while knows that every trading system has good and bad months. In some months I have made as much as 50% ROI, in a bad month I have had a -7% or a -5%. If you only test your system for 2-3 months how do you know that you didn’t just catch the good months with your backtesting. Then, if the system is not as profitable as you thought, you will be confused and disoriented when it starts to lose you money. For this reason I suggest to back test a trading strategy for a minimum of 6 months (if you back test it for 1 full year is even better)

Create a set of money management and risk management rules for the system:

As a final point you need to create a set of money management techniques and strategies to go with your trading strategy. Also, it's important that you apply your money management techniques while you are backtesting your free Forex software system.

Stay tuned as I post articles daily and you can always take advantage of all the information we are giving out to the Forex trading community every single day.

Regards,

Jay Molina

Pro Currency trader & Educator