How Do I Analyze Indices Trading System Signals?
How Do You Interpret Indices Trading System Signals?
Back Testing Indices Trading System Signals
Generating Indices Trading Signals with a trading system is one of methods to trade indices - it is one of the ways that a beginner trader can attempt to determine the direction of the trend with a good level of accuracy - and with a little indices practice and back testing on stock indices demo trading account so as to gradually increase the level of accuracy of this indices trading system through practice indices trading using the stock indices trading system.
The best technique of how to backtest a indices trading strategy is by following these 2 steps:
- Indices Paper Trading Method
- Stock Indices Demo Trade Technique
Indices Paper Trading -indices paper trading method of testing a indices system involves placing your trading system on a stock indices chart - then take the chart back to a particular date - for example 3 months back, and then using this indices chart stock indices price history to determine where your system would have generated buy stock indices trading signals, sell stock indices signals and exit indices signals. Write down these points on a indices journal and also write the profit per indices trade or loss per indices trade and then calculate the total profit of loss after you have recorded a good number of stock indices trades generated by the indices trading system such as 20 paper trades stock indices trades and determine if your stock indices trading system is overall profitable or not, the win ratio of indices trading system, the loss ratio of your stock indices system & the risk:reward ratio of your trading system.
This is an ancient method of testing indices trading systems that was used by traditional traders when there was no online stock indices markets or computers for that matter, the trader would use something like the A3 or A2 paper, graph format paper and draw the indices charts manually (Imagine drawing the charts on your indices trading platform by hand every day or every hour, would you as a trader be ready to do that? - doubt it!) Those traders were hardworking than most, anyway for our paper trading method example, just a sample data of 20 stock indices trades is all we need.
A good indices trading tool to use to backtest your stock indices trading system is the MetaTrader 4 Indices Trading Step by Step Tool. Found in the MetaTrader 4 charts toolbar of MT4 software - If you want to find the charts toolbar on the MetaTrader 4 platform it is at the top of the MT4 platform. If the charts toolbar is not there: Click View (next to file, top left corner of MT4 platform)>>> Tool Bar >>> Charts. Then click Customize button key >>> Select Indices Trading Step by Step >>> Click Insert >>> Close.
MetaTrader 4 Indices Platform Chart Tool-Bars
How Do I Read Indices Trading System Signals? - How Do I Interpret Indices Trading System Signals?
Once you get this MetaTrader 4 tool you can move your stock indices chart backwards, & use this MetaTrader 4 tool -indices trading step by step indices trading tool - to move the charts indices trading step by step while at the same time testing when your indices trading system would have generated either a buy stock indices signal or a sell signal, and where you would have exited the trade, then write down on a indices trading journal the amount of profit/loss per indices trade and out of a sample number of stock indices trades you would then calculate the overall profits/losses generated by the indices trading system.
If your stock indices trading system is profitable on the paper trade method then, it's time to open a stock indices demo account - demo indices trade and test if your stock indices trading system is profitable on the real trading market as it's on the paper trading method. This is known as the process of testing a trading system or back testing a trading system.
Writing a Indices Trading Journal
Write a Indices Trading Journal to keep track of the profitable stock indices trades and use the indices journal to determine why these trades were profitable. Also keep a log of all losing stock indices trades and use the indices journal to determine why these trades made losses so as to avoid making these same mistakes the next time that you are trading using your trading system.
Tweak your indices trading system until your indices trading system gets a good risk: reward ratio - with the indices trading signals that you generate with it. Aim to get a good risk: reward ration of 3:1 and a win ratio of above 70% for your stock indices trading system is a good ratio, with proper indices money management rules even a indices trading system with a win ratio of even 30% than is less than half of your trades make profit you can still make a profit using the proper indices money management rules. You might want to learn the topic indices money management to know what the illustration below is all about: Risk : Reward Ratio.
How Do I Read Indices Trading System Signals? - How Do I Interpret Indices Trading System Signals?
Learn Stock Indices Money Management Strategies Methods Guide
A manual stock indices trading system is still the best way to generate indices signals compared to automated trading systems, a manual stock indices system is a better technique and is also much simpler to implement.
However, other indices traders prefer automated indices trading systems and for those indices traders - they can check the automated indices trading data on this learn indices trading webpage MQL5 Indices Expert Advisors and Automated Indices Trading Systems.
You can also learn other indices trading strategies to use in your indices trading system from our list of indices trade strategies topics that provides you with various methods of how to generate buy signals & sell signals using various technical analysis methods - Indices Trading Strategies List.
How Do I Read Indices Trading System Signals? - How Do I Interpret Indices Trading System Signals?
