In three easy steps, you may create your own trading system.

Now that you've mastered the fundamentals of technical analysis, it's time to use what you've learned. Let's put all of this information together and create a simple trading system.

This should give you a good understanding of things to look for when creating your own forex trading method.

This is a moving average crossover system, which determines whether to go long or short using moving averages.

Before entering a trade, further technical indicators are needed for confirmation.

You'll learn how to employ a variety of technical indicators to pinpoint precise “crystal clear” entry and exit points.

The trading system can be created in three easy steps:

• Set a deadline for yourself.

• Choose your entry point (s)

• Make a decision on your exit strategy (s)

Setup for Trading

• Invest in the daily chart (swing trading)

• 5 SMA applied to the close

• 10 SMA applied to the close

• Stochastic (14,3,3)

• RSI (9)

Trading Guidelines

Entry Requirements

Enter LONG if:

• The 5 SMA crosses above the 10 SMA and both stochastic lines are pointing up, (do not enter if the Stochastic lines are already in the overbought territory)

• The Relative Strength Index (RSI) is more than 50.

Initiate SHORT if:

• The 5 SMA crosses below the 10 SMA and both stochastic lines are descending, (do not enter if the Stochastic lines are already in oversold territory)

• The Relative Strength Index (RSI) is less than 50.

Exit Procedures

• When the 5 SMA crosses the 10 SMA in the opposite direction of your trade OR when the RSI returns to 50, it's time to exit.

• When the trade reaches a stop loss of 100 pips, exit the transaction.

If you find the daily chart too slow, try playing with alternative time frames.

However, keep in mind that the faster the time frame, the more likely “false positive” trades are. These are trades that match the entrance requirements yet result in you being stopped out.

Remember, a trading system is only as good as the people that use it!

You must be self-disciplined in order to follow the guidelines!