We haven't posted a blog post in a while, we've been super busy with our courses and community. Yesterday we begun something new, Newbie Wednesdays, These series will be structured and further developed so they can guide our new community members, and non community members as the sessions will be a free-for-all, to gain unique skills and develop as traders!
Yesterday we spoke about 4 points, yet e didn't go into them in much detail so we are releasing this blog post and it will be followed by a pre-recorded video explaining each point in detail.
You can watch the short recording of yesterdays Newbie Wednesday workshop on our YouTube channel,
The 4 Points we want to cover with Episode one are:
1) AVOID CHASING TRADES WITH RSI 2
RSI is an important part of our trading system, yet there are a few ways you can use it, the one idea is lowering your RSI period setting to 2, doing this can help you not chase trades anymore. This simple tip if applied with price action can dramatical lower your chasing exposure.
The idea is to wait for an RSI hook in the direction of price action, the play you're attempting to buy or sell. Below is an example
In the below example the DAX moved from the first buy signal (green) to the daily high by 80 points, the next buy signal came 40 points after the first one, yet the RSI2 signal generated 13 extra signals in this bullish trend.
2) ALWAYS HAVE A PAIN POINT
Setting a pain point for the trading session is a vital process of risk management. A solid pain point is 3%, I generally have a 5% pain point, but I do have more experience and as a trader I am more active than the ordinary trader, thus I suggest you keep your pain point between 1% and 3%.
Breaking down your pain point into $ value is important, an example is: A 25$ loss on a 500$ account is 5%, this thus putting emphasis on your position sizing and does not allow you to over expose on a single trade, but rather break down your risk into, for example 2$ per trade, this allows you to be wrong multiple times before your pain point is hit.
Having a pain point is mandatory, following it is vital. When your pain point is hit that means you could start getting emotional about your trading, hence its best to stop when it is hit and come back later or tomorrow with a fresh mind and a new pain point.
PRO TIP: To find patterns and execute them flawlessly you need to have FCA (Focus, Concentration and Attention), if you cannot devote the necessary FCA to your trading, you might as well stop wasting your time and money and come back when you can devote this essential trading skills.
3) KNOW WHICH PATTERNS WORK BEST
Price action patterns are extremely vital to our trading success, knowing them and seeking to find them is the job of a day trader. The only thing that fundamentals bring to us is volatility, every trading decision is based on technical factors.
There are a few key patterns that we seek to find, they are:
Head and shoulders (and reversed head and shoulders)
Contraction (flag, wedge)
Bull/Bear breakout pattern
We specifically seek to find patterns at or around the VWAP, here are some examples,
Bearish breakout: lower highs leading to a support
Bullish breakout: higher lows leading to a resistance
4) FOLLOW THE EXECUTION RULES
Our system execution rules are rather simple, it is a small mix of indicators and a lot of price action... the only thing you need to have is the discipline and focus to execute the system over time.
Discipline is doing what needs to be done regardless of how you feel about it. The difference between a pro and an amateur is consistency, which is driven by discipline. You are responsible and in control of your own level of discipline.
We will come back with videos explain each point in the coming days and that will wrap up the first episode of the Newbie Wednesday!
We hope this helps and are excited to share more with you all soon and also hope to see you in the next event!