The BEST “Simple Trading Strategy” For Beginners That Noone Ever Told You… (Beginner To Advanced)
Published: 2022-07-26
Status:
Available
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Analyzed
Published: 2022-07-26
Status:
Available
|
Analyzed
Predictions from this Video
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Topic
Status
The speaker has developed a trading strategy that they find to be highly accurate and profitable across various markets.
"I found a combination of a specific indicator technique and a bit of price action that provided a massive money-making Edge in every Market that I tested and traded it on and this is actually still one of my favorite and most accurate ways of trading."
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The speaker introduces a trading strategy named 'RY' (Aggressive Reversal Divergence Entry).
"this strategy is something that I call Ry a r d e and no it's not because I had a childhood friend named Ry it's because it stands for aggressive reversal divergence entry"
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The RY strategy is designed to identify and profit from markets that are reversing from a downtrend to an uptrend.
"RY is meant to help us take advantage of reversing markets so markets that have been in a downtrend but have a very high likelihood of reversing heading higher and making massive profits"
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The Relative Strength Index (RSI) indicator period should be set to 10 for this trading strategy.
"I change it from 14 to 10 for this specific way of trading"
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For a bullish RY trade, price must make lower lows, RSI must go oversold, and divergence must occur with the RSI's higher low being above 30.
"we need price to be making these lower lows we need the RSI indicator to go oversold at some point we need to have Divergence in the RSI indicator based around price meaning price making lower lows the RSI making a higher low and the higher low of the RSI indicator must go above 30"
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A bullish entry for the RY strategy can be an engulfing candlestick pattern where the green candle's body is larger than the preceding red candle's body.
"the next thing I'm looking for is the entry and the entry is going to be based on one of two Candlestick patterns the first one being the engulfing pattern an engulfing pattern is just when for a bullish example the green candle body is bigger than the red candle body"
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Another bullish entry for the RY strategy is a 'close above' pattern, where a candle closes higher than the previous candle's high.
"the second type of Entry that we're going to be looking for is something called a close above entry this is when the candle that we're entering on closes above the high of the previous candle"
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For the RY strategy, a stop loss is placed a few pips below the swing low (e.g., 10 pips), and the initial target is set at a 1.4:1 reward-to-risk ratio.
"my stop loss would go below the Swing Low by a few Pips for the example we're going to do today we're going to go 10 Pips so let's say 10 Pips below ... and for a Target I'd like to go with at least a 1.4 to one"
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After reaching the 1.4:1 target, the stop loss is moved to break-even, with the aim of achieving at least a 2.5:1 reward-to-risk ratio by trailing the stop loss.
"once price hits that 1.4 I move my stop loss to break even and I see if I can get at least a 2.5 out of it by following these swing lows and managing the position"
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A specific EUR/USD trade using the RY strategy reached its initial target, had its stop moved to break-even, and then the stop was further adjusted below a support level with targets around 1.0347.
"we pushed up to that 1.4 to1 reward to risk ratio I was talking about then I decided to move my stop loss to break even after doing so price began to consolidate ... I move my stop loss to right below that support level ... I have a pretty good chance of hitting my targets that are right here around 1.03 47"
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For a bearish RY trade, price must make higher highs, RSI must go overbought, and divergence must occur with the RSI's lower high being below 70.
"we're looking for the exact opposite of a bullish version we want to see price making higher highs we want to see that followed by RSI going overbought instead of oversold we want to see Divergence meaning the RSI indicator making lower highs while price is making higher highs and we want that Divergence to come out of the overbought area which is above 70 going down below 70"
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A bearish entry for the RY strategy involves a bearish engulfing or a 'close below' candlestick pattern.
"once that happens we'll be looking for a bearish version of an engulfing or close below candle for entry"
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A specific bearish EUR/USD trade using the RY strategy with a 1.4:1 reward-to-risk ratio successfully hit its targets.
"we have our stop loss ... we're going to go with a 1.4 to1 reward risk ratio at first let's see what happens ... price in fact pushed down to our targets"
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Backtesting of the RY strategy on GBP/USD over 2.5 years showed 19 trades (12 wins, 7 losses), a 63% win rate, a 20.92% gain, and a 6% maximum drawdown.
"the results over the past 2 and a half years it produced 19 trades with 12 of those being wins seven being losses that's a 63% win rate with that 1.4 to1 reward to risk ratio bringing us to a grand total gain of 20.9 2% with a Max draw down of around 6% for this strategy over the past two years"
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The RY strategy generated approximately 20 trades in two years on the 4-hour chart, but would yield more trades on lower timeframes like the hourly.
"it only produced 20 trades or so over twoyear span on the 4H hour chart but if you trade down the hourly or even lower than that then you're going to get a lot more trades than just 20 trades per pair"
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Key areas for optimizing a trading strategy include stop-loss and target placement, and identifying the currency pairs where the strategy performs best.
"the main things I like to optimize for are stop and Target placement along with the different currency pairs that a specific strategy works best on"
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Creating a risk management plan and a comprehensive trading plan (including strategy rules, risk management, and trading times) are crucial steps after optimization for consistent trading success.
"after optimizing your next step is to create a risk management plan ... once you have your risk management plan created the next step is to create a full trading plan ... this is your whole plan of what you're going to do every single day when you get behind charts"
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Failing to backtest, optimize, create a risk management plan, and a trading plan significantly increases the probability of losing all or part of an investment.
"if you skip those steps your chances of losing either some or all of your initial investment are nearly 100%"
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