Tag: indicator strategy forex

Tag: indicator strategy forex

Does Fibonacci trading strategy even work? Should you trade using the Fibonacci retracement tool? I have tested many strategies on the Trading Rush channel, and almost every other day, there is a comment about testing the Fibonacci trading strategy or to give my thoughts on it. Until now, I have avoided making a video about the Fibonacci trading strategy, because the idea of Fibonacci in trading sounds really stupid. But that’s my personal preference, and as you know, on the Trading Rush channel, we keep personal preferences aside and only talk with the real world data. In this video I’ve tested the Fibonacci retracement tool 100 times to see if it works or not, but unlike other indicators we have tested on the Trading Rush channel, Fibonacci can’t be backtested. Let me explain.

You see, there are many people who believe that the fibonacci tool is really good for trading, but then there are traders who believe that fibonacci levels are just some useless lines on a chart. Now remember, almost 90 percent of retail traders lose money in trading. So instead of believing other people, let’s look at the real data and understand how fibonacci actually works.

Fibonacci was a medieval mathematician, and came up with a sequence that goes something like this. 1+1=2, 2+1=3, 3+2=5, 5+3=8, and so on. Here, each new number is sum of the 2 numbers before it.

Now, if you take any number from this sequence, and divide it with the next number, you will get a value of 0.618.

If you divide any number with every other number on this sequence, you will get the value of 0.382.

And if you divide any number with 3rd number next to it, you will get a value of 0.236. Furthermore, if you divide 1 and 2, you will get a value of 0.5.

You probably noticed that these are the same numbers you will find on a fibonacci tool. On many charting platforms, these numbers are turned into percentages. So the 0.382 becomes 38.2 percent. 0.618 becomes 61.8 percent, and so on.

These fibonacci numbers are found almost everywhere in the nature. From the shape of the galaxy to the number of petals on a flower. Since the fibonacci is found almost everywhere in the nature, many traders believe that fibonacci can also be applied in trading.

So, people started applying the fibonacci tool when the charting platforms provided.

It is widely believed, that since price doesn’t go in the straight line in one direction, when the price is in a trend, the price will retrace at the fibonacci level, hence the name fibonacci retracement tool.

So in an uptrend, if you take the fibonacci tool from the swing low to the swing high, it is said that the price has a higher probability of reversing near the fibonacci levels. Some traders like to give higher importance to the 50, 61.8 and 38.2 levels.

Now here’s a big problem, unlike other indicators who actually take real market data to calculate their values, fibonacci draws levels that have almost no relation to the actual market data. Many fibonacci fan boys will buy stock or a forex pair because the number of petals on a flower or the shape of the snail’s shell is based on the fibonacci.

For example, the V WAP tool that I have recommended many times on this channel, takes the real volume traded on a stock to calculate it’s value, fibonacci doesn’t do anything similar to that.

One might say, that fibonacci does take market data like the swing low and swing high into consideration. Well yes, but that’s actually a problem.

You see fibonacci numbers have almost no real useful value in Trading. It has great importance outside of the financial markets. The only reason why fibonacci works, is because people believe it works. If enough people believe that the 50 percent retracement level works as a reversal point, many people will enter trade near that level, which will make the price go in the desired direction.

The reason why normal strong support and resistance levels work so great, is because almost everyone is going to see them at the same price.

But in trading where every trader looks at the swing low and swing high differently, the fibonacci value is not going to be at the exact same level. Furthermore, fibonacci has so many levels that some traders can get confused about which level is giving the real reversal sign, in other words, from what level is the price reacting. This makes fibonacci trading really inefficient when compared to other trading tools like the V WAP indicator.

Furthermore, backtesting the fibonacci tool can be really difficult because fibonacci requires you to draw from the swing low to the swing high and vice versa. When you try to backtest, this swing low and swing high will become very biased.

In the other trading strategies I have tested 100 times on the Trading Rush channel, I took trades by looking at the indicators and not the price itself, and since non repainting indicators look exactly the same on live markets and while backtesting, the backtesting data was unbiased.

Now, one can recommend using the zig zag indicator while backtesting the fibonacci levels. This way, you won’t have to think about the swing low and swing high while backtesting. And That’s what I did. Since many traders believe that most of the time price retraces near the 50 fibonacci level, I tested the fibonacci trading strategy 100 times to find the truth.

Although the zig zag indicator was able to show proper swing lows and swing highs most of the time, it is not a perfect indicator. Some swing lows and swing highs according to the zig zag indicator were not accurate, but since swings of a trend can differ from trader to trader, this small number of less accurate swings were fine. And when the zig zag lines were looking like a mess, no swings of a trend were considered while backtesting.

Since price does not react at the fibonacci levels exactly, I only considered a fibonacci level if price had reversed near it. By near I mean, if price reversed from 5 percent above or 5 percent below it.

Since fibonacci is mostly used in a trending market, I used the 200 period moving average to find the trend. When most part of the swing low and swing high was on the one side of the moving average, I consider the fibonacci level. Furthermore, in an uptrend, the swing high has to be higher than the previous swing high. Similarly in a downtrend, the swing low has to be lower than the previous swing low.

So after backtesting the fibonacci tool 100 times, here’s what I found out. Only 6 percent of the time price reacted near the 23.6 level. 18 percent of the time near the 38.2 level. 14 percent of the time near the 50 level. 15 percent of the time near the 61.8 level. 14 percent of the time near the 78.6 level. And 33 percent of the time price either reacted from the 100 level or went straight through all the fibonacci levels. That make sense since price is in a range most of the time, but one thing to consider from this data, is that except from the 23.6 level, price reacted from all other levels the same way. That is not a good thing. In an uptrend, since the price is going to reverse with a higher swing low anyway, and since there is no significant difference between the levels, one can say that the fibonacci levels hold almost no significant value in trading, especially when compared with other things like normal support and resistance.

The only reason people think fibonacci works in trading, is because they believe it works.

One can argue that this data was not enough to be judged on. Maybe, but after testing many different trading strategies 100 times on the Trading Rush channel, and taking virtual trades 10000 times to see how close are we to the actual win rates, we have seen that the strategies that actually perform good, give very good profit numbers after backtesting only 100 times. For example, popular trading strategies like the MACD, Ichimoku cloud, bollinger bands, that are trusted and used by many professional traders, gave very good win rates after we backtested them 100 times.

It will take many months to take 100 trades for many traders in live markets anyway. The question is, will you keep using a strategy that doesn’t make profit even after multiple months, when there are strategies that have the potential to make almost 50 percent in the same time period. Most probably won’t use a strategy that keeps them in a loss in the long term.

If you want to see the best trading strategies that performed really well, you should check out other trading videos on the Trading Rush channel.

That’s all. Now you know a little bit more about fibonacci trading. Like the video if you liked it. Subscribe to the Trading Rush channel and ring that notification bell to see more trading strategies tested 100 times. Check out the Trading Rush app using the link in the description. Maybe consider supporting the channel on Patreon. Thanks a lot.

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Reversal Trading Strategy SECRETs that Paid Courses won’t tell you…

Post author By Trading Rush
Post date October 3, 2020

reversal trading strategy

Tag: indicator strategy forex

Does reversal trading strategy actually work? What is the best way to spot reversals? Trading reversals can be a difficult task and many traders will recommend trading the trend instead. On the Trading Rush channel where we tested many different trading strategies 100 times to find their win rates, I tested strategies as a trend following strategy and I used the 200 period moving average to do that. If you haven’t watched them, go watch now, and subscribe to the Trading Rush channel, because we test many strategies and trading indicators on this channel to find their win rates and you don’t want to miss that. But sometimes trading against the trend can be more profitable if price makes a big move in the opposite direction.

But as you already know, predicting a reversal point on a trading chart is almost impossible, because if there is a catalyst moving the market, price can move in one direction for a long period of time.

For example, let’s say price is in an uptrend, it makes higher swing highs and higher swing lows. Now, if the price starts to go sideways, some traders will look for reversal patterns like the double top pattern. Double top patterns can be really effective when used correctly, but in this example where the market is in a strong uptrend, how do you know the double top pattern is formed at the end of the trend? There is a good chance the price can go sideways, or give a small pullback instead of a reversal and can continue to move in the upward direction. Because of this, new traders are usually recommended to trade with the trend.

Since trend is your friend, instead of trading against your friend, what if I told you, that you can call yourself a reversal trader while trading the trend at the same time? Because, that’s what many professional traders do, especially the one selling the courses. Don’t get me wrong, there are reversal traders who trade actual reversals and make profits. But then there are traders who will trade reversals and trend at the same time. This is one of the most effective ways to catch the big move in trading. For example, let’s say bill the first wants to make money as a reversal trader. He finds a stock or forex pair where market is in an uptrend. Similarly, there is bill the second, who also wants to trade the reversal. He finds a different pair that is also trending upwards. At first glance, both of these charts look very similar to each other. Lets say, when the market goes sideways, a double top pattern is formed. Since double top pattern is a reversal pattern, both bill the first and bill the second take a short position.

Now remember, both of these charts were in an uptrend, so when the double top pattern occurred, on the first chart, instead of price making a big move down and starting a new downtrend, price reacted to the trend line and moving average supports, and simply went in the upward direction and continued its uptrend. On the other hand, price on the second chart actually gave a reversal and made a big downward move. On the first chart, bill the first made a loss. But on the second chart, even though the charts looked very similar at the first glance, bill the second made a big profit.

In this example, to understand why one reversal worked and other one didn’t, we will have to switch to a higher timeframe.

If we look at first chart where bill the first lost money, you can see that the price is in a strong uptrend on the higher timeframe. Furthermore, it has just touched a support area and has enough room to move higher.

On the other hand, if we look at bill the second’s chart on the higher timeframe, you will noticed that unlike the first chart, this chart is in a strong downtrend. Not only that, but it recently touched a strong resistance area.

On the first chart, even though there was a double top reversal pattern, the price was in a strong uptrend on the higher timeframe which decrease the probability of giving a reversal on entry timeframe. In other words, bill the first lost his trade.

Now on the second chart, even though we had similar price action, the price did make a big move down and the reversal worked, because this reversal on the higher timeframe was actually a small pullback reversal in a strong downtrend. And since this pullback reversal was near a strong resistance area, the price made a big move down. In other words, bill the second made money with the reversal, because he analyzed the market a little bit better by using multi-timeframe analysis.

There are many people who will sell you a reversal course but you will probably never make money, because in reality when they show you their reversal trades, the trades are actually trend following setups on higher timeframes. They won’t tell you this because they want you to keep paying them money while you keep figuring out why your reversal trades don’t work.

There are trading setups that actually work without any multiple timeframe analysis. For example, let’s say there is a company whose stock has fallen due to some events. The company has a good reputation and its stock was trading at 500 dollars at one point. Due to some event that made the company employees stuck at home, the company made a loss, and the stock price is now near the 100 dollars mark.

Now 100$ on a stock is a psychological number. Numbers with multiple zeroes at the end usually work as a psychological support and resistance levels. Since this company had a good reputation and will probably make money when the employees come back to work, people will be interested in buying at the 100$ support level. Since we know this support level has a higher chance of working, we can look for reversal trading opportunities near the 100$ mark. Even if the price doesn’t immediately make big move in the opposite direction, there is a high chance that there will be a small push up, since many traders will be interested near this level, as the 100 dollars mark will be clearly visible on all timeframes.

There are many other popular reversal patterns like the channel and the trend breakout. But like I have said in my previous videos, just because a price breaks a tiny line you drew, doesn’t mean the price is going to make a big move in the opposite direction. Price can simply move in the sideways direction, and most of the time, it does.

Reversals are part of trading, and there is a saying that goes something like “price can’t go in one direction forever, it has to reverse at one point”. Well yes, but actually no. It doesn’t matter if the price can go infinitely in one direction or not, to trade reversals, what matters is how accurately you can predict a reversal point in a trend. In reality, most retail traders can’t predict the accurate timing of a trend reversal, and even if they could, many probably won’t be able to tell if it’s a reversal or just a small pullback. When you see a reversal pattern such as a double top or double bottom, it is a good idea to exit your open positions, instead of predicting the new big move with a new position.

So, when trading reversals, it is a good idea to do multiple timeframe analysis to get the big picture. Otherwise, there is a chance the you will end up trading against a strong trend of the higher timeframe. Furthermore, since trend is your friend and since trend is where most money is made, it is a good idea to trade the reversal of a pullback, instead of trading the reversal of the entire trend. This way, you will have a higher chance of making money in trading.

That’s all. Now you know more about reversal trading. Like the video if you liked it, subscribe and ring the notification bell to see more trading videos. Check out other videos on the Trading Rush channel to see more videos like these. You should check out the 5 steps trading strategy that can help you make more money as a day trader. And thanks for supporting the Trading Rush channel on Patreon. You are awesome!

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3 Advanced Trading Techniques that Pro Traders Use to EXIT Trades with more profit

Post author By Trading Rush
Post date September 26, 2020

Best Trading Techniques trading rush

Tag: indicator strategy forex

What are some advanced profit booking techniques that can make you better at trading? If you have watched other videos on the Trading Rush Channel, you know I recommend using a fixed stoploss and profit targets for beginner traders. But at some point, once you gain enough experience in trading, you should probably switch to different trade management techniques that have higher probability of making more money. In this video we are going to see some of those trading techniques, so you can make more money as well.

If you have watched the small account challenge series, and the liive trading videos on this channel, you know I use very different profit booking methods in those series. In the small account challenge series, where we tried to double the Trading account, I mostly used the fixed profit target. But in the liive trading videos, I had no profit target, instead, I was trailing the stoploss candle by candle. That’s because sometimes it is better to use a profit booking technique based on the market movement.

For example, lets say you have found a stock or a forex pair that is moving strongly in one direction because of a strong catalyst. When the price gave a pullback in this strong up trend, you found a trading opportunity and take a trade according to your entry strategy. Normally, in a fixed stoploss and profit setup, you will book a limited profit. But in this example, since we know that the price has potential to move strongly in the upward direction, we can simply avoid setting a profit target, and move the stoploss below the candle that is making the new high. This aggressive stoploss trailing technique was used in the liive trading videos. This strategy is most effective when the price is less noisy.

For example, lets say you enter at this candle according to your trading strategy. As you can see, there is less noise on this chart and the price movement is easier to read. Since we know that the price movement is good and has a potential to go higher, we can set the stoploss just below the entry candle if it is big enough, and trail the stoploss below the candle that is making the new high.

Here, after taking the entry, you can see that price went sideways. Since none of the candles made a new high, we cannot trail the stoploss. When the candle makes a new high, we can modify the stoploss, and set it just below the candle that made the new high. Now, if the price reverses from this point, you are only going to lose a small amount of money compared to your original stoploss. When the next candle made a new high, your stoploss is in profit. From now on, the trade is not going to make a loss.

These kinds of trades have potential to make a big profit. In this example, the stoploss was hit when the candle broke the low of the previous candle. The reward to risk ratio on this trade was 4.5 to 1. In other words, you made a profit that is 4.5 times more than your initial risk. I have used the same strategy in the liive trading videos, and have gotten multiple green days in a row because the potential loss per trade was reduced as the trade went higher in the entry direction.

But what if the price movement is noisy? How can you book a big profit? Well, if you think that the price has potential to move in one direction, you can simply use the ATR indicator to set the stoploss. I have already made a detailed video about it. Check it out if you want.

If we apply the ATR stoploss on our previous example, you can see that we would have exited the trade at a much higher point. But this doesn’t mean you would have gotten a better reward to risk ratio than the previous trade. That’s because the initial stoploss in this example was way bigger than the last stoploss. When we trailed the stoploss candle by candle, we got a 4.5 to 1 reward to risk ratio. With the ATR stoploss however, we only got 4.2 to 1 reward risk ratio. This doesn’t mean that one is better than the other. One is made for less noisy price movements, and other one works by taking price volatility into consideration.

But what if you don’t want to continuously stare at the chart. Well, you can simply take partial profit as the trade moves higher.

Lets look at an example. Here, lets say the price has potential to move higher upto the clearly visible resistance level. But between the entry and the strong resistance level, there is another resistance level. We don’t know if the price is going to reverse from this weak resistance level or not. So instead of guessing, you book partial profit, and move your stoploss to breakeven. In this example, you exit 25 percent of your trade when the price reaches 1 to 1 reward risk ratio, and move the stoploss to breakeven. This way, even if the trade goes in the opposite direction after touching the weak resistance, you will not lose money, because you have already booked a small profit and your stoploss is at the breakeven point. But, if your trade reaches your next profit target, you will book a big profit, just like we did in the previous 2 examples.

Instead of booking 25 percent partial profit, some traders also like to book 50 percent or 75 percent profit when the trade reaches 1 to 1 reward risk ratio. The choice depends on the probability of price making a big move in your favor. If you think price has a higher chance of reaching higher reward risk ratios because of a strong catalyst, it is better to only book 25 percent at the first profit target and let the rest ride. If you think there is a strong resistance that can reverse the price in between, it is probably a good idea to take more than 25 percent off at the first profit target.

So here are some key takeaways you should note.

Number 1. When the price is trending and if the price move is cleaner, trailing the stoploss below the candle that is making the new high can be more profitable.

Number 2. If the price action is noisy but the price is trending, you can use the ATR stoploss to trail the stoploss. Again, I have already made a video about it, check it out to learn more.

Number 3. If you have doubt that price could reverse before reaching your profit target, you can book a partial profit when the trade reaches 1 to 1 reward risk ratio, and move your stoploss to breakeven. This way you will not lose money, and still have a chance to make big profit.

Now, instead of taking partial profits at the 1 to 1 reward risk ratio, some traders will only move the stoploss to breakeven. Moving the stoploss to breakeven at 1 to 1 reward risk ratio only, is not a strict rule. You can move the stoploss to breakeven anytime you think there is chance the price will reverse before reaching your stoploss.

Number 4. If you didn’t understood anything what I just said, and are even more confused than before, just use the fixed stoploss and profit targets to get consistent profit. As we have seen in the strategies tested 100 times series, fixed stoploss and profit targets also make a big and consistent profits in the long run.

That’s all. Now you know more about booking bigger profits. Like the video if you liked it. Subscribe and ring that notification bell to see more Trading Videos. Check out the Cool Trading Merch to support the Trading Rush Channel. And thanks to everyone for watching.

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2 BEST Forex Trading TIMES that can make you BIG PROFIT as a Day Trader

Post author By Trading Rush
Post date September 22, 2020

best time to trade forex

Tag: indicator strategy forex

What is the best time to trade the forex market? Unlike stocks that are only open for trading for few hours, Forex market is open 24hrs a day, but not really. Forex market is open from 5 pm EST on Sunday to 5 pm EST on Friday, but not every trading hour in this time period are worth trading. There are times where Forex Market is more active, this is where you can get a very good reward to risk ratio, and there are times where Forex Markets are simply not worth trading.

Let me explain.

In Sydney Australia, the Forex market officially opens at 5 pm Eastern Standard Time and closes at 2 am EST. You can sometimes see some good price movements when this session opens, but most of the time, the price action is not that good compared to other sessions we are going to see.

In Tokyo Japan, session begins at 7 pm Eastern Standard Time and ends at 4 am EST. This is where Forex pairs like USD JPY and GBP JPY give a good price movement.

Then there is the London session that starts at 3 am Eastern Standard Time and ends at 12 pm EST, and is one of the preferred sessions by technical traders. London session is the most active forex session, and is also called the central trading capital of the world.

Just like the London session, the New York which opens at 8 am and closes at 5 pm, also gives some great opportunities for traders. In fact, it is the second largest platform in the world. In this session. you can find some really good trading opportunities on the Forex pairs that involve the US dollar.

But why am I talking about these Forex sessions? Why are they so important?

Well, you see, for price to make big move in your favor and to increase your profit potential in trading, the Institutional money has to be involved. When these session open, their respective banks also show interest. For example, in the London Session, the Britain’s central Bank has a heavy impact on the Forex Market.

Now one can say, that the best time to trade forex, is when the London session or the New York session is open because they have relatively good price movement. But if you look at the opening and closing timings of these sessions, you will notice that there is a overlap. There are few hours where both London and New York sessions are open. Since both of these sessions have a high trading interest, you can say that the overlap of these sessions is the best time to trade.

Lets see an example. On this chart, you can see how the market is in a range and the volume is low in the Japan and Sydney Sessions. But when the London session starts, you can spot the increase in volume. Even the price movement is a lot better than the previous session. When the New York session opens, you can see the volume rising even more. During the overlap of the London and New York sessions, you can see how price made a very big move. And if you compare this movement with the Asian Session movement, you can easily tell that the price action during the overlap is much better, and give some of the best trading opportunities.

But how can you actually use this information to enter trades? Obviously, not everyone is going to find the London and US overlap time suitable for trading, because everyone most likely lives in different corner of the world. If you can’t trade during the US and London overlap, which is from 8 am Eastern Standard Time to 12 pm EST, you can trade in the Sydney and Tokyo overlap hours. Most of the time this period is not that volatile compared to US and London, but it still gives some decent trading opportunities. The worst overlap among the 3, is the London and Tokyo overlap. You will rarely see a high volume price action in this period, and because this overlap is only 1 hour long, many traders will not participate.

But if you can participate during the US and London overlap hours, make sure you look out for any upcoming news. Price can make a huge sudden move in one direction when there is a big news release. Since price action gets volatile during the overlap hours and in the London session, you should probably plan your stoploss ahead of time. When the price starts making sudden moves, you don’t want your stoploss to be taken out. If you set your stoploss by taking the price volatility into consideration, when a new session starts, don’t make the mistake of setting your stoploss using the volatility of the previous session. It is good idea to wait and analyze the movement of the new session. For example, if you set your stoploss considering the volatility at the end of the Asian session, there is high chance your stoploss will be taken out if the volatility rises in the London session. If you don’t know how to use the price volatility to set your stoploss, you can use the ATR indicator. I have already made a video about it, check it out to know more about the ATR stoploss and how it can be better.

Some say news trading can also be very profitable in forex, but in reality, predicting the price direction before a news release is a difficult task to do, and new traders should probably avoid it, but not completely. For example, if there is a big news that has the potential to increase the volatility, you should wait for the first few sudden moves, and take advantage of the high volume price action that will follow for a while. Unemployment rates, Central Bank meetings, and interest rates are few examples of news events that can give a decent trading opportunities.

Overall, the best time to trade the Forex market and to find some of the best trading opportunities, is during the overlap of the London and New York sessions. If you can’t take trades during the overlap, the London session can be the next best one, followed by the New York session. If possible, you should aim to take most of your trades during the overlap of the forex sessions, and when the price is more volatile. Otherwise the price will stay flat and you will be stuck in a trade for a long period of time.

You should also be careful while trading in the New York session, as there can be a late news release from the previous sessions. These unexpected price movement can turn your profit into a loss. Furthermore, it is a good idea to avoid taking trades at the very start and at the very end of a forex session, that’s because traders from the previous session could be exiting the trades, this can sometime lead to a noisy price action at the start of the next session.

You can even trade in session overlap hours only, this way you will only take trades when there is a movement in the market, and trading only for few hours will also avoid you from over trading, which in other words, will avoid you from blowing up your account.

And If you find it confusing to convert your local time to find the timing of the Overlap sessions, you can change the time zone on your charting platform to use the New York time, or the Eastern Standard Time. All the Forex market hours mentioned in this video were in Eastern Standard time as well.

So that’s all. Now you know a bit more about trading. Like the video if you liked it. Subscribe and ring that notification bell for more trading videos. Check out other trading strategy videos on the Trading Rush channel. And if you find this video helpful, you will find the 5 steps trading strategy video helpful as well. In that video, I show how you can filter bad forex pairs, and take trades on quality setups using 5 proper steps. Thanks a lot for watching.

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5 Simple Steps Complete Trading Strategy that PRO Traders Know but Beginners Ignore…

Post author By Trading Rush
Post date September 16, 2020

5 step complete trading strategies forex stock market trading rush

Tag: indicator strategy forex

Can these 5 steps make you more profitable in Trading Well, In this video, I’m not only going to show you some of the most useful trading techniques, but I’m also going to execute it in live market, so you can actually see how it will look when you will trade with real money. Also, checkout other strategies videos in the strategies tested hundred time series, where we tested different strategies 100 times to find their win rates, because some of the data mentioned in this video is based on that series, and don’t forget to subscribe to the Trading Rush channel, after all you don’t want to use a strategy that doesn’t even work.

If you have been trading for a while, you have probably realized that not all trading charts are worth trading. There are times when you should take more trades, because the market is perfect for booking big profits. But then there are times when you should completely avoid trading, because if you do, you might end up with multiple losing trades in a row.

Instead of immediately looking for new trades, the first thing you should do is analyse if the market is worth trading or not.

So when I started recording this video, the forex pairs were not really that good for taking trades. As you can see, on the Euro USD pair the 200 period moving average was looking flat, and the price was crossing it multiple times in a short amount of time.

If you have watched my previous videos, you know I use and recommend using a 200 period exponential moving average to find the long term trend, because it’s the easiest way to find the trend, and if we take trade in the direction of the long term trend, we can achieve greater reward to risk ratios, in other words, we can make more money.

So, on these forex pairs, I’m looking for a chart, where price is staying above the 200 period moving average for a while, and where the moving average is not looking flat. Furthermore, the price action should look cleaner. For example, look at these two charts. Here, the first chart looks much cleaner than the second chart. On the first chart, the price is staying above the moving average, and is not looking flat. This kind of chart is perfect for beginner traders, as the price action is easier to read, and your stoploss won’t get taken out because of a choppy price movement.

Just like the Euro USD pair, the GBP USD and GBP JPY were also looking choppy. Even though they were below the moving average, the price action was not cleaner like the price action we saw in the example.

Many people lose money by taking too many losing trades in a bad market. If your charts look similar to these, you should probably avoid trading at that time.

When I started recording this video, most of the forex charts were looking like this. So instead of taking trades in these choppy conditions, I closed the charting platform and came back later when the price action was smoother.

Few hours later, the price action on the NZD USD pair was much cleaner. The price was above the moving average. Furthermore, the 200 period moving average was not looking flat.

Once you filter the bad charts, and find a good forex pair, it’s time for the step 2, where we will use the multi-time frame analysis to find more information about the chart. By more information I mean the points of interests where price has a higher probability of reacting. Sometimes, when you trade on a smaller timeframe, you might end up taking long trades, at a strong resistance level that is clearly visible on the daily time frame. This lack of information can make you lose money.

In this example, I’m on the 5 minutes timeframe. So to find the important levels that many people can easily see, I will switch to the daily timeframe. Here, I will draw the strong support and resistance levels that I can see. Since we are using the 5 minutes timeframe to enter trades, switching to the daily is not really necessary according to some people. But I like to do it to make sure I don’t end up taking short trade on a smaller timeframe at a strong daily support.

If you don’t know how to draw strong support and resistance areas, check out the support and resistance level video on the Trading Rush channel, it has some good examples that you will find helpful.

As you can see, the price couldn’t cross the resistance level, and also reacted to the support level. Since we are trading on a 5 min timeframe which is much smaller than this, we can say that there is enough room for us to take long and short trades on the 5 min timeframe. Right now, we are not on a strong support or resistance level.

Once we have identified the areas on the daily timeframe, switch to the 4 hours timeframe, and look for other clearly visible areas. As you can see, the price is currently near a support level.

If we switch to the 30 min timeframe, we can clearly see that the price reacted to that support level.

Now if we switch to our entry timeframe which is 5 minutes, we will have more information than before. First we only knew that the price was in an uptrend. But now, we also know that the price is near a support level.

Now in the third step, we will use an entry signal indicator. I’m using the MACD indicator in this example. MACD strategy was one of the best trading strategies, that we have tested in the strategies tested 100 times series. If you want to learn more about it, check out the MACD video on this channel.

As you can see, the MACD has not given an entry signal yet. But we can tell that it is going to, because the momentum is slowing down. I have also made a second MACD video, where I explained how to use the Histogram to our advantage. Check that video as well.

Since patience is the key, I waited for the MACD to give an entry signal which was around 20 minutes later. As you can tell by looking at the histogram value, the MACD has given a crossover. It is a small crossover, so it can be difficult to see on some mobile screens. The entry according to the MACD strategy, is at the closing price of the crossover candle, or at the opening price of the next candle. If you use a different entry signal indicator at this step, take entry according to your entry strategy. Now remember, in the third step, we are not executing the trade yet, because there is one more thing you have to calculate.

In the fourth step, you have to calculate the position size by looking at your stoploss strategy. A lot of new traders make the mistake of setting a bad stoploss. Your stoploss has to be far enough from the entry so the price have enough room to wiggle around before going in your favor. And you have to decide where you want to set your stoploss before taking the trade. That’s because to get a consistent loss amount, you have to calculate your position size using your stoploss distance.

I have explained more about this in my ATR indicator video, and in the part 7 of small account challenge series. Check them out if you want to learn more.

According to the MACD strategy, the stoploss goes just below the swing low, which also happens to be below the support area in this case.

In the step 5, it’s time to set the profit target. In this example I’m going to use a fixed profit target, which will be 1.5 times greater than my risk. To get a 1.5 to 1 reward to risk ratio, I can simply multiply my stoploss by 1.5 to get my profit target.

Once you have calculated all of these values, you can enter the trade. It might look like it takes a lot of time to calculate the stoploss, position size, and profit target before executing the trade, but it only takes few seconds once you get a hang of it. Furthermore, even if you are trading on a smaller timeframe like 5 minutes, you will have enough time to calculate everything properly.

Once you have taken the trade with a stoploss and profit target, you can simply close your trading platform if you are not looking for new trades. Once you have taken a trade, there is not really a point in staring at your chart. The price is either going to touch your stoploss, or your profit target.

In this case, the live trade I took using the MACD strategy was profitable. Furthermore, it went exactly how we predicted, and even reacted to the resistance area we drew using the daily timeframe. With only 5 simple steps, we were able to execute a profitable trade.

That’s all. Now you know a little bit more about trading. Liked the video if you liked it. Subscribe and ring that notification bell for more trading videos, and check out other videos on the Trading Rush Channel to find some of the best trading strategies that actually work. And thanks to all the Patrons for supporting the Trading Rush channel on Patreon. Thanks a lot.

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4 USEFUL Trading Breakout Tips that can Make You MONEY in TRADING

Post author By Trading Rush
Post date September 6, 2020

4 breakout strategies trading rush

Tag: indicator strategy forex

If you find yourself in a position, where you enter a trade, but it immediately goes in the opposite direction, before finally going in your favor? Well, then this video will make you better at trading. Lets look at a theory. Lets say, you saw some strong support and resistance areas and you are waiting for the price to break those levels. You put your money in a position when the price gives a break out. The price is breaking out of a resistance level, but instead of moving further in your direction, it turns around as soon as you enter the trade and hits your stoploss.

To understand why price goes against you after a breakout, we will first have to understand what actually happens inside a range breakout. Since price ranges after a trend, let’s assume that some traders took long positions in an uptrend. After a while, the price gave a pullback near a support level after touching a resistance area, but then struggled to make a higher high. After getting buying and selling pressure at the support and resistance levels, the price simply moves sideways. Any beginner trader can tell, that this is a range market, and price will make a big move after it breaks these support and resistance levels.

But here’s the thing. Some traders who bought when the price was trending, or traders who bought at this pullback, will still have an open position. In a range market, price can either break up, or break down. In this example, since price hasn’t given any signs of reversal, traders who are holding a long position, will set a stoploss just below the breakout support.

Then there are second kind of traders. These traders are willing to sell at a resistance level, hence the selling pressure that is stopping the price to go higher. The traders who are selling at this resistance level, will most likely set their stoplosses, just above the resistance level.

Now here’s a big problem. In these kinds of scenarios, the stoploss of a retail trader becomes obvious and vulnerable. In a breakout, the people who are selling at resistance, are setting their stoploss just above the resistance. And the people who are buying at the support, are setting their stoploss just below the support level.

Now lets say, there is bill. Bill, is the big banks. Bill is the one who trades in very large quantities. Bill the big banks, sees the breakout opportunity. He sees that there are many stoploss orders waiting to be triggered. Now remember, big banks actually trade in very high quantities than the retail traders. So when an institutional trader enters with a very big position, the price makes a big move, especially on smaller timeframes.

In this scenario, when the price comes near the support. Bill the big banks, creates a selling pressure that leads to a small downward move. But since there were a lot of retail traders waiting for a breakout, 2 things happen. Number 1, the people who had their stoploss orders just below the support level are taken out. Since a stoploss order in a long position, is a sell order, more selling pressure is created at a breakout.

Number 2, the people who wanted to sell at the breakout, finally sell, and create even more selling pressure. These traders will set their stoploss just above the breakout level. The selling pressure leads to a big red candle.

Now, what do you think will happen, if the big banks creates a buying pressure as soon as the breakout happens? When this happens, the traders who entered after the breakout candle, are taken out because they had a stoploss, just above the breakout level. Since stoploss order of a short position is a buy order, a new buying pressure is created. And if the top resistance is crossed, even more buying pressure is created as the traders, who had a stoploss above the resistance, are taken out, and new orders are created at the new high. The retail traders who had open orders below the support levels, basically got played.

Beginner traders who get to experience this part of the market, sometimes complain that their broker can see their open orders, and is trading against them. No, that’s not really the case. Your orders are simply too predictable.

So how can you avoid this from happening? Well, the easiest and effective way of trading a breakout, without getting played, is to wait for the price to react in your favor.

There is a chance that price will reverse after a breakout, but we cannot know that as a retail trader. If a breakout is going to work, In a downward breakout, the level that is broken will now act as a resistance level. So, it is better to take the short position, when the price comes back to this resistance area, and struggles to go higher. Then you can look for an entry signal, like a engulfing candlestick pattern.

Now some traders will say, why not just put stoploss orders far away from the obvious support and resistance levels? Well, if you do that, you will not get a decent reward to risk ratio.

What about trend breakouts? If a down trend that was respecting the trend line resistance, suddenly breaks out, will the price reverse? No, unless the down trend was a weak pullback of an uptrend, or if it is at a strong support level, a simple trend line breakout will have a low chance of reversing the price direction completely. You see, when the price breaks the trend line support or resistance, it doesn’t always has to mean that price will take a 180 degree turn. It can simply mean that the trend is getting weaker, and can go side ways.

Now imagine a second scenario. What do you think will happen, when price breaks out of an all time high resistance level, and makes a new high for the first time in its history? It will be on the news. Many people who have never traded in their entire life, will take long positions in that asset. But what if price doesn’t go further up? What do you think will happen then? Well, first of all. The people who took trades only looking at the news, will panic. When the price comes back below the previously broken resistance level, many will cut their losses. This will create a huge selling pressure. and since this is a panic sell, you can capture a good profit when the price makes a big move down.

A lot of beginner traders are told to trade the trend breakouts, without completely explaining what kinds of breakouts are better. The trend breakouts that have a higher chance of working, are probably the pullback trend breakouts. In a strong uptrend, if the price gives a small pullback, you can trade the break out of that pullback. This way, you will take trade in the direction of the long term trend, which will increase your chances of making a profit.

Now lets imagine another scenario. This time, when the range is formed after an uptrend, there is no Bill the big banks, or any bank to take trades against you.

Let’s say, someone draws the support and resistance levels, at the tails and body of the candles.

When they take positions at the breakout, the price goes in the opposite direction again. But this time, it’s because the beginner trader is too much focused on their favorite timeframe. You have to understand that not everyone is looking at the exact chart as you are. The support and resistance you draw using tails and bodies of the candles, won’t always work, because they will look very different on different timeframes.

If you are waiting for a breakout to happen, make sure the support and resistance you are looking at, can be easily identified on other timeframes. Furthermore, when the breakout happens, make sure it is visible on different timeframes as well. Because sometimes, a successful breakout on one timeframe, can mean something else on other timeframes. This can lead to a lack of high volume and interest near the breakout area.

After understanding these kinds of scenarios, you will be able to tell when a possible trap is set, and with patience and good money management, you will probably make money with the breakouts.

That’s all. Now you know a little more about breakouts in trading. Like the video if you liked it. Subscribe for more trading videos, and check out other videos on the Trading Rush channel, where we tested many different trading strategies 100 times to find their real win rates. Thank you very much for watching.

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I took 100 OPPOSITE Trades of a NOT Good Trading Strategy

Post author By Trading Rush
Post date August 24, 2020

opposite trading strategy trading rush

Tag: indicator strategy forex

What will happen if you take trades in the opposite direction? Will you make more money? Lets say, there is a trading strategy that doesn’t have good win rate. Like the Basic Aroon Strategy we tested 100 times in the last video. Since that strategy only produced a win rate of approximately 40 percent, one of the top comments on that video, was to test it again, but by taking trades in the opposite direction of the strategy. Surely the 40 percent win rate will turn into 60 percent, right? Well, why don’t we find out.

In this video, I took 100 trades in the opposite direction of the Aroon Trading Strategy, and here’s what happened. I’m not going to explain the strategy in this video again, since YouTube will think I’m repeating stuff again. But if you want to learn more about the aroon indicator, watch my previous video on the Trading Rush channel.

In my Aroon video, since I used the Parabolic Sar indicator to set the stoploss, the parabolic sar when taking opposite trades, will be on the opposite side. Let me explain. In the proper aroon setup, when aroon gives a buy entry signal, the parabolic sar is below the price. In this setup, we can easily set the stoploss at the parabolic sar. But if you are trying to take opposite trades, the parabolic sar is on the opposite side. So to fix this problem, I have simply set the stoploss at the same distance in the opposite side, as I would set it in a normal aroon setup.

As always, I have used the Official Trading Rush App for backtesting, and while the backtesting clip is running, here are some important points I found by taking opposite trades.

Number 1. I took trades on the same pair, and on the same time frame. Since I bought when aroon said go short, and sold when aroon said go long, I lost most of the trades that I had won with proper aroon setup. That’s predictable, but here’s the interesting part.

Number 2. You might think, that since I lost the trade I had won last time, the lost trades in the last video will be profitable this time. Well, yes, but no. In my last video, I said, I lost most of the trades because Aroon was giving entry signals near the end of the trends. When I took opposite trades, the trades I lost in the last video were profitable. But not all of them.

You see, when a trend comes to an end, the price doesn’t make a big move in the opposite direction immediately. It can simply go sideways before going in the opposite direction.

I always backtest with the reward risk ratio that is more than 1, since most traders will use something that is greater than 1. What this means is, the price has to make a bigger move in the direction of our entry. Some of the trades I lost in the previous aroon video were profitable this time, because price had made a big move in the entry direction. But sometimes, the price was moving side ways. And since I had a reward risk ratio of higher than 1, in the sideways market, my stoploss was hit before the profit target.

So, after taking trades 100 times with opposite aroon trading strategy, I still got the win rate of approximately 39 percent. The proper Aroon strategy had win rate of approximately 40 percent. This strategy is also a hit or miss. The profit graphs of both of these strategies also look very similar if we flip it upside down.

So what did we learn from this experiment? Something I have said in one of my previous videos. Most of the time, price is in a range. And most money is made, when the price is trending. So you can’t simply take trades in the opposite direction of a not good strategy, and turn it into a money making machine.

That’s all. Now you know a little bit more. Like the video if you liked it. Subscribe for more trading videos, and to see other strategies and indicators tested 100 times. Download the Trading Rush App if you want to test your strategy. Thanks for watching, and special thanks to the amazing people who support the Trading Rush Channel on Patreon. You make these videos possible.

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AROON Trading – Best Money Indicator for Trend Traders Tested 100 times

Post author By Trading Rush
Post date August 22, 2020

aroon trading indicator

Tag: indicator strategy forex

If you are struggling to find the strength of a trend, or can’t figure out if the price is in a range or not, the Aroon indicator is right for you. Trend is where most money is made. So Aroon indicator can be very useful to determine whether a stock or Forex pair is trending or is in a range. When Tushar Chande created this indicator in 1995, it was mostly used to find the beginning of a new trend. Since then, traders have learnt to use it in different ways, and have created many different strategies around it. In this video, you will learn about the aroon indicator, how to use it to find more about a trend. Furthermore, I have also tested one of the aroon trading strategy one hundred times, to find if the Indicator works as an entry signal generator or not.

So if you want to know if the aroon strategy is a profitable strategy, stick around, after all you don’t want to risk your money on an indicator that doesn’t even work. And if you are watching the Trading Rush channel for the first time, also check out other videos on this channel, where we tested bunch of other indicators 100 times to find their real win rates.

This is how the aroon indicator looks like. On trading View, this indicator will come with the default length of 14. If it is different for you on your charting platform, just remember I have tested this indicator 100 times with these default settings.

As you can see, the aroon indicator will come with 2 lines. One will be the aroon up line. And other one will be the aroon down line. Now, on trading View, these lines are orange and blue in color. So to keep things less confusing, I have, and you should probably change it to green and red color respectively.

On the right hand side of this indicator, you will see some values ranging from 0 to 100 percent. These are the values that we are going to use to find the strength of a trend.

Here’s how most traders use the Aroon indicator. It’s a bullish trend, when the aroon up is above 70, and aroon down is below 30. Similarly, it’s a bearish trend, when aroon down is above 70, and aroon up is below 30.

Now one thing to note here is, the bullish and bearish signals are generated by looking at the aroon line that is at the top. Some beginner traders get confused, and take short trades when aroon down line is at the bottom. The bearish trend signal is only generated when the aroon down line is above the 70 percent level.

Now one of the best part about the aroon indicator, is that it helps to identify the range market. Most new traders lose money in a range market, so indicators like these really come in handy.

When the aroon up and aroon down lines are parallel to each other, the market is said to be in a range. It means that there is no trend going on. And if you are a new trader, you should probably avoid taking new positions. Other ways to identify the strength of a trend, is to look at the two aroon lines. If aroon lines are far away from each other, there is a strong trend going on. And if they are very close to each other, the price is probably consolidating at the moment.

Now like I said, the Aroon indicator is really good when it comes to identifying the trending and ranging market, especially for a beginner. But just like other indicators, people have found new ways to use this indicator, as an entry signal generator.

In this video, I have tested this 100 times, using one of the popular aroon trading strategy. Here’s how the strategy goes.

The buy entry signal is generated, when the aroon up is touching the 100 percent mark, and aroon down is at 0 percent. Similarly, the sell signal is generated, when the aroon down is at 100, and aroon up is touching the 0 percent mark.

Some people also use 70 and 30 levels to buy and sell, but those levels generate a lot of false signals. So i have used 100 and 0 levels to backtest, instead of 70 and 30.

But if you have been watching the Trading Rush channel for a while, you can tell, that this setup on its own can’t make money, because there is no way to identify the direction of the long term trend. If you trade on a smaller timeframe, you should always pay attention to the trend direction of the higher timeframe. Otherwise you will take trades in the opposite direction of the long term trend.

The easiest way to identify the long term trend direction, is to use the 200 period moving average. If price is above it. It’s an up trend. If price is below it, it’s a down trend.

So here’s how the complete modified aroon strategy goes.

We will only buy, when the aroon up is at 100, and aroon down is at 0, and the signal is generated when the price is above the 200 period moving average.

And we will only sell, when the aroon down is at 100, and aroon up is at 0, and price is below the 200 period moving average.

Since aroon indicator doesn’t give information about setting the stoploss, I have used the parabolic sar indicator to set the stoploss while testing the aroon indicator 100 times. Parabolic sar is an excellent indicator. If you have never heard about it, check out the parabolic sar video on the Trading Rush channel. And i have also tested that indicator 100 times to find its real win rate. You can find that video on the Official Trading Rush Website.

So, I tested aroon trading strategy one hundred times, here’s what happened. You can slow the backtesting clip, if you want to see each trade carefully.
I’m using the official trading rush app for backtesting. You can use it while testing your strategy as well. It will help you keep track of your trades, and will calculate everything in just one click. You can find it on the Play Store, or you can use the link in the description.

While the backtesting clip is running, here are some important points, advantages and disadvantages I found about the aroon indicator, while testing it 100 times.

Number 1. When the aroon lines were separated and were far away from each other, the trend that was going on was strong. Most of the time, there was no consolidation when the aroon indicator was indicating a trend. When price was in a range, the aroon lines were not on the opposite end of the Indicator. They were intersecting multiple times in a short time period. What this means is, the aroon indicator works great if you only use it to determine the strength of a trend, and to find if the market is ranging or not.

Number 2. The aroon indicator, worked great as an entry signal generator. Some trades I found were at a start of a new trend, or right at the correct end of a pull back. But there is one problem with aroon indicator that kept turning the profit into a loss.

Number 3. The biggest drawback of this Aroon Setup, is that the aroon indicator doesn’t know when the trend is coming to an end, or is stretched out too much. And it’s okay, because aroon is made to find the start of a new trend, and not the end. Most of the trades I lost while testing it 100 times, where at the end of the trend, where there were other signals of reversals. This could be easily avoided. To avoid taking trades at the end of a trend, you can use other indicators that do that job perfectly. I have made videos on these types of indicators on this Trading Rush channel. Check it out if you want. The best part about the MACD indicator video was one of them.

So, after testing the aroon indicator as an entry signal generator, here’s what I found.

The win rate of aroon indicator is approximately 40 percent. Since I tested other indicators with 1.5 to 1 reward risk ratio, on 30 mins, and on Euro JPY pair, I have used the same criteria to test this Indicator as well. There were many other indicator that performed way better, than what the aroon indicator performed here.

This strategy is a hit or miss strategy. In this backtest, the Aroon indicator didn’t lose money, but didn’t make money either. The maximum number of winners I got in a row were 4, and maximum number of losses in a row were 9. At one point, this strategy did make 1350 dollars. But then everything went downhill, and the 1350 disappeared as i took more trades.

If you are thinking about trading using the Aroon indicator, remember, Aroon is good when it comes to identifying the strength of a trend, or to determine of the market is in a range or not. When it comes to taking trades only based on entry signals given by the aroon indicator, you are better off with some other indicator.

I have tested many other indicators 100 times of this channel, some of them had excellent win rates. If you want, you can watch them in the Trading Rush App, or on the Trading Rush Website, and some of them are still here on this Trading Rush channel.

That’s all. Like the video if you liked it. Subscribe if you want to see more trading strategies tested multiple times to find their real win rate. Thanks to all the wonderful people who support Trading Rush on Patreon, you make these videos possible, and I really appreciate it. And thanks to everyone for watching.

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BEST Risk to Reward Ratio for Day Trading Stocks and Forex?

Post author By Trading Rush
Post date August 7, 2020

best risk reward ratio in day trading stocks forex market

Tag: indicator strategy forex

What is the best reward risk ratio? What should you use? What reward to risk ratio is best for your trading strategy. Lets find out! Hopefully this video will help out the new traders.

Use reward risk ratio higher than one, you have probably heard that somewhere before. But using a very high reward to risk ratio can turn your profitable strategy into a money losing machine. Let me explain.

If you are new to trading, and if you have a trading strategy that produces a win rate of higher than 50 percent with 1 is to 1 reward risk, do not use a reward risk ratio higher than 1. If you do, you will increase your chances of losing trades multiple times in a row. Let me give you an example.

Lets say, you enter a long trade, and you set the stop loss according to your stop loss strategy. Now, to get a 1 is to 1 reward risk ratio, you simply set your profit target at the same distance as your stop loss. As you can tell, this is a 1 is to 1 reward risk trade.

Now, every trade is like a coin toss. The price will either go in the upward direction, or in the downward direction. And with a reward risk of 1 is to 1 including commission, there is a 50 50 chance of winning as you will either lose or win the same amount.

But, If your trading strategy has a win rate of 55 percent. In the long run, you will be profitable. You will win more times than the number of losing trades. That’s Obvious.

But if you try to increase the profit potential to get the 2 is to 1 reward to risk ratio, you will actually decrease the win rate of your strategy, because price will have to move twice the distance than before. So your strategy that was giving 55 win rate with 1 is to 1 reward risk ratio, no longer gives that win rate. The new win rate will be much lower.

Some beginner traders don’t see this fact, and start trading with reward risk ratios that are very high. Like i said before, by using higher reward risk ratios like 3 is to 1, beginner traders are increasing their chance to get multiple losing trades in a row. This can lead them into believing that their strategy doesn’t work at all. Their strategies do work, but only with their proper reward risk ratios.

Then what reward risk ratio should a new trader use?
Since many beginner traders lack experience to analyse the overall market direction, it is recommended that they use a simple but effective trading strategy, like the MACD strategy that gives around 60 percent win rate, and with that use a 1 is to 1 reward risk ratio. That’s right. Using a reward risk of 1 is to 1, will help you win trades more consistently than you would with a higher ratio. This will also help with the Trading psychology as a beginner trader. Not losing multiple trades in a row will keep your mind stress free while looking for new opportunities.

Once you are comfortable with 1 is to 1 reward risk ratio, try increasing the profit potential with 1.5 is to 1 ratio. This will slightly decrease the win rate of your strategy. But by using this ratio, you will make money even if you lose one and win one.

You have probably seen a similar chart that shows the win rate required to break even. As a new trader, Instead of looking only at the break even percentage, you should also pay attention to the probability of losing multiple times in a row with different reward risk ratios. Here’s a modified chart. As you can see, the higher the reward risk ratio, the higher is the probability of getting multiple losing trades in a row. This is because, price has to travel more distance to reach your profit target, than it has to reach your stop loss. And as you already know, most of the time market is moving sideways. To get a very good reward risk ratio like 3 to 1, the price has to be in a very strong trend, and that doesn’t happen all the time.

So what is the best reward risk ratio in trading?

Well, it depends on what you are trying to achieve. If you are looking for consistent profit, you reward risk ratios between 1 to 1 and 1.5 to 1.
If you can handle the possibility of losing multiple trades in a row, use reward risk ratios that are higher than 2.
Since most Human Minds would prefer winning instead of losing, it is better to use the lower reward risk ratios, especially if you are just starting out. This way, your mind will be at peace while trading, and you won’t get paranoid by looking at the list of losses on your trading platform.

You have probably seen some traders move their stop loss to break even once the trade crosses 1 is to 1 reward risk ratio. They do that to remove the possibility of losing the trade when it has already crossed the 1 is to 1 reward risk ratio. Unless there is a strong catalyst that is moving the price in a strong trend, the probability of the trend reversing is higher, since most of the time market moves in a range. By moving the stop loss to break even, traders are simply eliminating the chances of losing money if the direction of the trend reverses, before the price reaches their higher reward risk ratios like 3 is to 1.

What about trailing stop loss? is that better? Well, it depends. There are different ways to trail the stop loss. If you trail your stop loss very close to the price, the price will touch your stop loss, since most of the time price won’t reach your profit target in straight line. But by trailing your stop loss, you will get consistent small profits and small losses. With a trailing stop loss, If the price moves strongly in your favor, you will get a good reward risk ratio. If it immediately goes towards your stop loss, you will lose your original risk. But if the price goes in your favor, and does some choppy price action before hitting the profit target, you will make a small profit with the trailing stop loss.

Here are some Key KEY TAKEAWAYS from this video.
Number 1: Reward Risk Ratio and Win rate, are inversely proportional to each other. If the reward risk ratio goes up, the Win Rate goes down. Similarly, if the reward risk ratio goes down, the win rate goes up.

Number 2: Since Most Human Minds prefer winning instead of losing, as a new trader, you should use a reward risk ratios that are lower than 2 is to 1.

Number 3. The Recommended Reward Risk ratios for consistent profit are 1 is to 1, 1.5 is to 1. And if you are a little bit experienced in analyzing the overall market direction, maybe 2 is to 1.

That’s all. Now you know little bit more about the reward risk ratios. Hopefully, this will help out the new traders with choosing the right reward risk ratios.
Like the video if you liked it. Maybe Subscribe for more trading videos. Check Out the Trading Rush App, and the Official Trading Rush Website for more videos. Or if you find these videos helpful, maybe consider supporting the channel on Patreon, or check out these Cool Merch I made for the best traders.
Thanks for watching!

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Best Part Of The MACD Indicator Trading

Post author By Trading Rush
Post date July 29, 2020

best part of macd indicator trading strategy