New Concept in RSI

New Concepts in RSI Free eBook
Paul Dean
2010
WWW.YOULEARNFOREX.COM
New Concepts in RSI

Where RSI Can Shorten Your Road to Success One hundred percent of the people that take the next few minutes to read what follows, will have learned things that will help them make better decisions about trading Forex. Regardless of whether you are a beginning Forex trader, an advanced trader, or someone in between, the next few minutes will give you answers to some of the things you probably have been looking for in Forex. This eBook has one goal and that is to give you new information that will make you a better Forex trader through understanding New Concepts in using RSI, the Relative Strength Index. Lets get started! Trading should be practical, it should make sense If you met me you would find out that I am a very practical guy. I wear jeans and t-shirts, I read books, go to church on Sundays, enjoy hot coffee, take long bike rides, and have a close circle of friends. When I drive somewhere, I take the shortest route (usually) unless my wife is with me Everything I do in life has to make sense, even this eBook. I grew up with my dad asking me; What have you done constructive today? Trading Forex has to make sense. Im not interested in wasting time to trade if in the long run there is no chance to make money. My goal is to make myself more profitable as a trader and do the same for you. Everything I do in Forex is about making profitable trades. If there is no profit in trading, there would no reason to spend time doing it; so profit is the motive for myself and for you. Im okay with profit and making money and so should you. If you are afraid to make money than this may not be the place for you. There is risk
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but without risk there would be no reward. I hope that makes sense. If it does, lets move on to one final point. I think people should share what they learn and if they share something that makes others profitable then it is okay to charge a small amount of money to do so. Many people have been rewarded for taking that step. I hope you do to, it might change your life! How I got here There is a reason I am where I am today, how I learned about RSI and the New Concepts about RSI that have made a difference in my trading and can make a difference in yours. I quit my job in August 2008. It was a practical decision. I designed high-end closets for wealthy people. Early in 2008 the construction market in Central Florida began to slow significantly. At 60, I had some decisions to make; find another job or do something else. Since 2005 I had been studying Forex trading. I had been up and down with my account, taken sophisticated and expensive trading courses, read multiple books, bought trading systems that failed, went to seminars that didnt provide any answers and spent hours on Forex trading forums all which proved unproductive. I wanted to be a full-time trader but I wasnt ready; intuitively I knew that I didnt know how to trade. It was disappointing in particular with all of the knowledge I had accumulated. I began to look for a job but I also decided to put $10,000 in a trading account. I did well in the beginning using a hedge system but then a friend and I figured out there was a hitch in the system and I ended up giving back most of my earnings to large draw downs. I started using Elliott Wave with Fibonacci analysis. I went to the top EWT site and signed up for personal attention with hourly updates on wave analysis. I read the top books on Fibonacci. Yet for every step forward there were two or three steps backward.
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One weekend while driving north to Chattanooga, TN on a Friday, I closed a trade with a $2500 loss. That left about $1900 from my original $10000 in my account. I was literally going backward and I had no answers. Obviously I looked harder for a job. Forex did not seem to be right for me. All the time I had spent had been a waste. Still, I knew that there was a way to trade Forex and make money. After losing the money on the trip north I had begun to analyze all the things I had learned about Forex and tried to determine which concepts and tools made sense. It occurred to me that with the millions of people trading Forex, that to win, a majority of people needed to make the same decision at the same time. That was just common sense, it was practical. So the question was, what were the majority of traders doing that I could emulate and make decisions in the direction the market was going. This lead to thinking about what made a trade move in one direction over another, outside of the fact that there were more people on one side of the trade than the other. First, retail traders like myself could not trade in enough mass to make the market move, so as a retail trader I had to be a follower. The best I could do was join a trend or figure a way to be there when a trend started. Later I would call this being in position to win and knowing which pitch to take just like a professional baseball player is looking for the pitch he wants to hit.. Second, there was a large part of the commercial market that didnt want prices to go up and down; they wanted stability to run their businesses and that included central banks of countries much of the time. Third, there were people in large numbers who could start trends or what I called momentum moves; banks, speculators and hedge funds.
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I came to the conclusion that to trade I needed to be able to be ready to trade at those moments. But what tools could tell me what to do that? I wasnt sure so I began to take a common sense approach to what I had spent thousands of dollars learning about. I looked in my toolbox of Forex trading tools and here is what I saw. Trend lines TLs do one thing and that is show where the trend was. They have no predictive power. For TLs to work, more than 50% of traders trading have to have the same trend line on their charts at the same time on the same time frame and they all must decide to trade in the same direction at the same time. I didnt think this was possible. Trend lines would not have a place in my final system although channels would. Price Action I traded every kind of bar known to man and I dabbled in candlesticks. I agree to this day there is something about pin bars or exhaustion set ups but there is no statistical data that I have found that conveys the reliability of these methods. They are like hearsay, you can find locations where the profits were dramatic but you could also find a multitude of times when there were not. Again, a large percentage of traders with lots of money would have to be looking for this same information. Considering it from a plausible point-of-view, it did not make sense. Confluence I include this here because Price Action traders like to include confluence as part of their argument for taking a trade. It sounds sophisticated. But it is simple. You find a price action bar or pattern and then you confirm it with Fibonacci or Elliott Wave or moving averages or a trend line or some other method and this means you have a better chance to win; but this also cannot be proven. Yes, you can find circumstances where it is true but you can find just as many that it arent. Again, if you have confluence, are there enough traders in the world to agree with you at that moment in enough volume to make the trade move? Same time frame, same currency pair, same time of day. Elliott Wave and Fibonacci I put these together because although the methods are sophisticated (it seems) there is no evidence that traders using them are
successful. There will be some who are but here is the problem. In EWT there are almost an infinite number of readings at any one moment and the with infinite interpretations and most EWT traders use some other indicators to confirm their trades. One of the so-called best EWT traders uses RSI and uses it incorrectly. In Fibonacci when prices start to retrace, there is no data that says one retracement level is better than another even if multiple Fibonacci ratios are drawn showing confluence. And is everyone in the world trading using this same method? Very doubtful. You might as well throw in Gann here too. Chart Patterns Chart patterns fall into the same category as price action. Patterns can be found everywhere but the results are subjective not objective. It has been shown that flipping a coin can produce the same patterns that prices make on their own. Moving Averages moving averages in particular making decisions when they cross seems totally impractical. A cross is not an indicator of future direction. No matter where you place moving averages there are major weaknesses and there is an infinite variety of combinations which make it unlikely that a majority of traders world-wide are trading on them. Single Moving Average This has some credence in my thinking. Why? Because many large institutions make decisions based on them. And although there is an infinite number of moving averages that could be moved it seems that the most talked about are 50, 100 and 200 day moving averages. Indicators - Then there are indicators like RSI, MACD, CCI, etc. How do they fit into the mix? There are several things about indicators, one is that many lag and therefore may not tell you much about what is going to happen, however a number, like RSI, are leading and indicate the future. Indicators have the potential to yield statistical data as they are algorithmic. However, without studying them extensively we may be using them wrong. RSI is an example of that. As I stated earlier, it was designed to locate when price was overbought and oversold but it fails to do that. It was also surmised that
when a divergence occurred between RSI and price that a reversal was about to take place. This too turned out to be wrong. However, Andrew Cardwell came along and found another signal on RSI called a reversal. The reason it was called a reversals was it that reversal signals actually reversed. So why RSI? I often tell traders that you cant trap price on your charts. That is what I used to do and it is what I think many traders try to do. That is why all of the analyzing and multiple indicators dont tell you much in the end. What do I mean? When you start to analyze a chart, and I used to do it for hours, you use all of the tools that you have in your arsenal. You draw trend lines, and you draw Fibonacci ratios, then you put in a few moving averages. You look for chart patterns and you check on RSI and MACD and a variety of other indicators. Its as if you are trying to trap price and make it go through a gate like rounding up cattle. No matter what you do, when price is ready to move in one direction it doesnt see all of your indicators. So what I was looking for was something that told me which way price was going. And what made price go? Momentum. Not volatility. Momentum. There is a difference. Volatility is the swirl of price fluctuations that can occur around news or some other event that cause people to flip a coin and guess the direction of a trade. Whiplash is one of the first thing new traders learn to avoid. Up 120 pips one minute down 50 the next and stopped out, only to see price reverse again and go back in the original direction. To trade this way is to bring on psychosis. Momentum is the river coming out of the whirlpool (volatility). Knowing when volatility turned into momentum was the key point.
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By watching RSI charts and the signals that the RSI Paint automatically painted hour by hour or minute by minute it became clear what I was seeing momentum. It also became clear that there was more than one kind of momentum. How did this work in conjunction with the millions of other traders on the planet? It didnt matter, I was trading on market motion, not on a static line, pattern or wave on a chart and best of all, divergence and reversal signals could be tracked. Now there was a way to be ready when the large traders who moved the market traded. The 4 RSI Signals These are simple to learn. Within a few minutes they can be located and it begins to give the trader a completely different understanding of the chart in front of them. Finding them can be done manually but to trade efficiently, the trader should use The RSI Paint Indicator which automatically locates them and sends alerts to the computer screen in a popup box; currency pair, time frame, signal type, RRR (Reward to Risk Ratio) and time. The 4 RSI signals each tell something special about momentum and put the trader in position to trade when other big time traders are getting ready to trade. The 3 Kinds of Momentum Trading is about momentum. Michael Marcus who reportedly turned $30,000 into $80 million was interviewed by Jack Schwager in Market Wizards. One of the things Marcus said was that one of his best trading methods was to determine where price was about to trade with momentum and enter with a large position and a tight stop. If momentum didnt move when he thought it would, he got out. Momentum means you make money, no momentum means you sit and stew. So trading RSI is one of the best methods known to trade momentum. Why? Because it is a momentum oscillator or indicator. Divergence signals which were once thought to be reversal signals are actually retracement signals and what we call Momentum Type 1. They tell the trader that a trend is slowing.
Reversal signals, discovered by Cardwell as stated earlier, are continuation signals or what we call Momentum Type 2. They tell the trader that the trend is getting ready to continue. The third kind of momentum is the critical type of momentum and it can be tracked with a high degree of accuracy. Momentum 3 is the momentum that provides directional force to your trade. Momentum 1 and 2 put the trader in position to win, Momentum 3 makes him or her win. Momentum 3 is the momentum that drives price to the objective and does so with little draw down. High Position Sizes with Low Draw Downs When you are certain about the trade direction and the trade momentum all you need is Momentum 3. Momentum 3 drives price immediately in the direction of your trade meaning there is less noise to deal with. Traders are making their decisions and the direction of the trade is set for a period of time. That period of time depends on the time of the trade, the currency pair traded and the time frame. Regardless, the RSI PRO Forex Trading System has a objective measurable target for each trade. Where to Start This is what I would call the Quick Start Guide to learning all of the concepts I have talked about. You can do this in a few days time or at the pace you feel most comfortable. 1. Read, RSI PRO: The Core Principles this book was written over a year after RSI Fundamentals: Beginning to Advanced. The purpose of the book is to layout the basic principles of trading using the New Concepts of RSI. Many of the traders who have read this book even after reading my first book, feel like it was a great review. This eBook also has the most I have written about Momentum 1, 2 and 3 in one chapter.
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2. Read, RSI Fundamentals: Beginning to Advanced I rewrote this book about 4 months ago and it doubled in size. It covers every aspect of trading using the New RSI Concepts. 3. Install The RSI Paint Indicator You may have already done this while reading RSI Fundamentals: Beginning to Advanced. Once you have all of the information from #1 and #2 above, you should begin to familiarize yourself with the trading RSI Indicator. This is the place to demo trade and get the feel of the mechanics as well as the concepts. 4. Member Area Once you have the RSI Fundamentals: Beginning to Advanced you have access to the Member Area. This is where you can learn additional information and getting weekly data about momentum locations from statistical studies. 5. Read, RSI Trading Examples Vol. 1 This book was written so that traders could learn by example. You will find this book to be a great help in your trading journey. There are 10 exercises at the end that emphasize the major RSI concepts. 6. Email me your questions. I think most RSI traders who have bought this trading methodology have emailed me questions. I answer them all myself and in the depth that they require. I consider this my training ground. This is where I learn to make the system better so I encourage traders to email me. One email can make you money in particular if you do not understand a concept and your question might help others. My goal is for you succeed. With that I am going to leave you to questions that have been asked of me about the system. I trust that you will email me if you have questions. 7. Purchases pay attention to the website when you order and to your email for Special Offers.
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FREQUENTLY ASKED QUESTIONS How is your system different from Andrew Cardwells RSI Trading System? I have listened to two of Cardwells audio seminars. They go over the basics of RSI trading from his viewpoint. The basis of my system is from his system and his work with reversals. Where we differ: 1. I am not a proponent of overbought or oversold. Cardwell sells an indicator which removes the 0 to 100 fixed state of the RSI feeling that this makes it easier to read overbought and oversold. I do not believe RSI should be used for this as there are too many false readings. 2. I do not use moving averages to filter my signals as MAs are lagging and the main idea behind using RSI is that it is a leading indicator. If MAs are necessary to confirm a trade then there is no reason for the RSI? 3. Although not necessary, I have successfully enhanced the reliability of a trading signal with Bi-Channels for determining long-term and short-term trends. 4. I developed the first RSI indicator that draws reversals and divergences on charts along with many other features which includes alerts to the computer, email or cell phone. 5. Not only are we trading RSI we are studying how it works statistically and providing weekly information on times of momentum, RSI levels at the time of signal and the ratio of Positive Reversals to Negative Reversals. 6. We have a daily newsletter that discusses current trades and helps educate traders. 7. We have a Members Area that is available to customers where they can learn more about RSI. 8. I have written 3 eBook and I answer all emails sent to me in an effort to help traders of RSI at any level to improve. Can I send you a Check or do accept PayPal?- We accept PayPal and Google Checkout. How much is the follow up book and the videos? The basic book is RSI Fundamentals: Beginning to Advanced which is available as part of The Complete System which includes the RSI Paint Indicator for Metatrader 4. The Traders Examples Vol. 1 is an aid to the RSI Fundamentals. The third eBook is RSI PRO:
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The Core Principles. This book contains the basics of RSI trading and is for those not yet sure they wish to trade this method. Do you have a website with this info? Yes the website is www.youlearnforex.com Does the Paint Indicator work on Tradestation or Nijatrader and if so how much? The RSI Paint Indicator only works on Metatrader 4 which is a free download. Do you have anything on YouTube that demonstrates your Paint Indicator or can you email me a video clip of it? There is nothing on YouTube and no video clip. You can see charts by signing up for the You Learn Forex Daily Info Newsletter which is sent out each day and discusses trades. Have you attended any of Andrews seminars? I have not however I have talked to Andrew many times but he has not told me anything outside of his audios about RSI. Is this a complete summery of his work or your work based on his? It is my work based on his and then a further extension of his work. Do the arrows paint on the chart as shown in some of your examples? - No. The signals are clear on the RSI and on Price. Adding arrows would only clutter the chart. Does the alert for potential entries include sound and pop up alert with comment? - Yes, there is a pop-up with sound and the alert can be sent to email or cell phone. The pop-up indicates the currency pair, the time, the type of signal, the date, and the RRR factor. (Reward to Risk Ratio) Direction and strength are two key success factors. Does your RSI system help to identify and confirm the trend before a trade is entered? Does it in anyway give some indication of the strength of the trend? - RSI is a momentum oscillator which measures two kinds of momentum. The first is Retracement momentum and the second is Continuation momentum. Reversals are continuation momentum and mean that the trend is about to continue. Also there are other factors that we utilize from RSI to confirm the trend. The strength of the trend is
not something that can seriously be predicted however for every reversal signalled there is a specific target. Can Reversal or Divergence signals be filtered from the indicator as part of the indicator setup during live trading and once the trend has been established? - The indicator can show divergences and reversals, just divergences, or just reversals. These can be filtered or added on the fly and/or be completely removed. Signals however after the trade of both kinds can be helpful in understanding what the trade may or may not do next. Going back and forth between time frames is seamless and you can have the indicator on as many charts as you wish. In a sideways market, how does the indicator help me to stay out of trouble or does it help me to take short trades in both directions? - RSI is excellent for trading in consolidation. In particular if the consolidation has good width (distance in pips). Do you have any indication of the systems percentage success rate? - You cant really pinpoint success rate as this is not an automated system. People who specify a success rate are not being truthful. However, based on our target projection method for each trade the signal success rate for the last 10 years has been around 47% with a 7:1 reward to risk ratio more than enough to make money. Much of trading success comes from the traders ability to understand simple concepts in addition to the signals which are laid out in the eBook and expounded upon in the Trading Examples Vol. 1. I am very aware of divergences and reversals and I think I understand how these work. So far, Ive been using the MACD and CCI mainly to help spotting divergences. The more difficult part is spotting reversals with a high percentage of accuracy. Im currently using a modified zigzag indicator to help me with this, but with limited success. Im looking at the RSI paint to enhance / support / replace these indicators what do you think? - The zigzag will not really help that is one of the reasons that I had The RSI Paint Indicator designed. Ive invested thousands in tuition, robots, indicators and what like. I have been trading full-time for 13 months now, but do not seem to make a break-through to start making serious pips. What is the potential number of pips of your system on
average if traded full-time; lets say per day, or week or month? (I understand it is difficult to answer this question because of the many variables, but then at least give an indication of the potential?) My apologies for asking difficult questions, but I would appreciate your views. - This is a difficult question to answer as it depends on the style you are trading. I have short-term traders, scalpers and longterm traders. If you had taken a reversal signal on the hourly in Dec. 2009 you would be up nearly $25,000 on one standard lot and 1 trade. I have traders doubling their accounts in 20 to 40 days. I have doubled mine in 9 days at times with 10% as the goal per trade and 5% risk. Much depends on the market. I dont think you will be disappointed in what you will learn and I understand investing lots of money because I did much the same thing. In which eBook do you talk about momentum the most? I bought the RSI Advanced and I don't see much about it. The first and second edition of RSI Advanced do not go into momentum in depth as it was not my focus at the time and the concepts I understand now were not clicking around in my brain. In Trading Examples Vol.1 I talk about momentum in 25% of the examples and provide 1 exercise regarding momentum. The eBook, RSI PRO: The Core Principles has one chapter on momentum. RSI PRO: The Core Principles is free to those who have ordered the RSI Fundamentals: Beginning to Advanced, The RSI Paint Indicator, and Trading Examples Vol. 1. Is there a video of the RSI Fundamentals: Beginning to Advanced? Yes. It is free to those who order the RSI Fundamentals Beginning to Advanced. Just a brief note to say while I might be interested in what you are offering, I am finding it too confusing and too much of fragmented Up-sell. $14.99 for this, $39.99 for that and then the indicator etc. It all seems rather costly given that great volumes of work by well know authors are available for much less and they have gone to the trouble and cost of the full publishing and printing process. Just my 2 cents worth. - Not a problem and thanks for your comments. Each of the books has a different purpose. I have people from 45 countries who arent able to afford The Complete System who email me for a complimentary eBooks all the
time. So, the inexpensive eBook was a chance for them and many others to see the principles behind the system at a small investment. By the way, there is no one selling the RSI information found in The RSI PRO: The Core Principles anywhere for $14.99, and anyone who buys that book and decides to invest in The Complete System gets it free. I thought that was a great value. Many of the traders here have been thanking me for providing a low cost entry into learning the system. There are chapters in that book that are worth a great deal of money even if you didnt use the RSI system. I would also put up what is in that $14.99 eBook against what Andrew Cardwell charges $3500. You can successfully trade with what you learn in it. If you have come across this exact information I would love to know where because I have spent 3 years of my life researching this particular topic and I could list book after book that I have read, none with anywhere near the information you will find here. The Trading Examples eBook was in response to many of the RSI PRO traders who wanted more information about how I view trades. I am just becoming aware of the power of the RSI and am keen to find out and learn what I can about how it is used most effectively. My problem is knowing if it is worth the money. It seems everyone has something to sell and the marketing is often better than the product. When I read as per the examples below, This is my latest book I know what I am buying today is not the whole story and in the next few months or next year there will be another updated version and its very Mark McRae-ish if you know what I mean. Having a look at the website the full package seems to be $175 and then there is your latest book which I gather is on top of that and so it all goes on etc. - I appreciate where you are coming from. I, like most Forex traders, got scammed in the beginning for thousands of dollars. I can think of two things that totaled about $10,000 so I have been there and done that as they say. Although there is some duplication in my books they are all directed at different groups of people. The RSI is a solid method of trading and the
cornerstone of how I trade. It clearly comes from the reversals that Cardwell found on RSI but it is rather ridiculous to think that he is charging $3,500 for what he teaches. At least it has come down some. I would have to sell 28 complete systems to make what he sells on one. Aside from the reversals, my system has completely evolved away from his. So I am certainly not charging the going rate and greed is not my motive. I decided a long time ago that if I ever figured out a way to trade successfully I would share it at a reasonable price because I know how many traders have been scammed out of hard earned money; me included. That is one of prime reasons I wrote the latest book for $15 so that people who are gun-shy could ease into it so-to-speak. Thus I offered that book that tells you all you need to know to start and if you like what you read, you can buy The Complete System and the Traders Example Vol. 1 and I will give you that first book free. Again, the Trading Examples Vol. 1 book was in response to traders wanting to see how I trade and how I view charts that I trade. The more I trade the more I realize that trading is decision-making and that is what I am trying to do in my own trading and that is where I think I can help beginning and advanced traders. Just a quick anecdote. I think I have bought Mark McRaes book so when you mentioned him it reminded me of a guy who bought my Complete System this week and the Trading Examples Vol. 1 book and was ecstatic when I sent him the RSI PRO: The Core Principles for free. Funny thing is, he sent me about 5 or 6 emails before he bought asking me in-depth questions because he had also been scammed; who hasnt in Forex? I answered all of his questions. So far I have been able to do that and I hope I can continue to do it as it is fun to see people making money for the first time. May I ask what the foundation of your RSI expertise is? Is it based on Andrew Cardwells course did you take the course, or Constance Browns books, etc. since its unlikely that you have reinvented the wheel with all the material being original to you? Im just trying to get a handle on the quality and reliability of the material. I also saw in a recent email from you that you have a price histogram on your charts is that unique to you and part of the method you are selling?
I learned from two seminars on the Internet presented by Cardwell. I have read all of Browns books. None of it is relevant (literally) to my method. I read Walter Baeyens book. Some interesting ideas but not really that valuable. My system takes Cardwells system and takes out what I think are the weaknesses. The Price histogram was only there to make a point but is not necessary to trade successfully. Most of my knowledge is from my own hard work and research. I have had some valuable help from an RSI trader who lives in Singapore who bought my book and has done some programming for me. He designed the RSI Paint Indicator that the download tool that we use to pull data from different currency charts. The momentum concepts I have written about are rather unique and my own and a book that talks about momentum exclusively will be out before the end of 2010. Much of my statistical research on the 4 signals, and some of Cardwells thoughts, have proved wrong, i.e. target projection method. I've read all of your articles and every single detail about your system from your website even before you just launch this new one - a great looking site by the way. Now I focus on the trade Type 3 Momentum. Due to Forex widely different from seasoning, roughly how many Type 3 trades occur from monitoring all pairs every day with low risk entry (like 15 pips EURUSD) in this recent market (since it is considered to be narrow in summer compare to other season)? First, thanks for reading all of my articles (currently there are close to 100 at EzineArticles). You should have a pretty good idea of the basic concept we are working with. My son does by website design and is open for business (www.mattdeandesigns.com ). He is a college freshman in graphic design. Momentum 3 comes from my three years of studying RSI and realizing there are different kinds of momentum. The most I have written about momentum is on
the website and at EzineArticles.com. I am hoping to complete a book on Momentum 1, 2 and 3 before the year is out; I am doing extensive research now. There is no other book on momentum that I know of like I define it so it will have original ideas. Momentum 3 happens under a variety of circumstances but typically there are 3 times during the day that it occurs most; after news and Dow, end of trading day EST, and around 5am EST. So if those occurred every trading day, roughly 250 days per year there would be 750 opportunities on one currency pair. Obviously Momentum 3 will not always present itself every day. There are a number of factors that make those trades work so answering the risk question is difficult. However, if you are trading a Momentum 3 trade on the hourly you would normally be able to have risk no higher than the Peak or Valley Bar that define a Negative and Positive Reversal (explained in the book) so you would know your risk going into the trade. Also, if you using the 5% risk on The Income Trade you would know what your risk was ahead of time and also what your target needed to be.
The 10% goal plan (The Income Trade) you recommend is highly appealing to me. Frankly, I have dedicated myself to be a solid fulltime trader for many years even though my success rate is nil and I don't give up. Is your training course covering in detail how to achieve this 10% goal? Is this 10% goal applying to fulltime trader only or is even a part-time trader realistically able to take the trades? - The course covers how to trade using RSI. It is not what you will find on any website or in any book. These concepts do not exist in one place like this. The 10% goal of the Income Trade is related in as much as most of the trades I take are using the RSI PRO system. Momentum 1, 2 and 3 is not discussed in The RSI PRO system as it is a concept that I have developed since its writing however it is there in concept. If you are available to trade the times I have specified then I think you can make money with this method. If you are trading in the Asian session you would need to flush out the times when momentum is likely to occur but they are less dramatic.
Succeeding in trading is all about patience and persistence.
Regarding stop loss size, how many pips for JPY pairs comparing to EURUSD 15 pip entry as mentioned in your newsletter? What is the ratio of stopped out trades compare to profitable trades on average for Momentum Type 3 trades each day ? This is due to my experience in other trading system I learn before. As other system tells me 70% chance of profitable trades, it turns out it means I have to take all the trades for entire day and then 30% fail, However, if I'm in bad luck only taking those 30% failure trades due to the hour difference (meaning I still need time to sleep not able to take those profitable hours), then it is not feasible to achieve the 70%. Then further I find out the other system I learn only working in London hours starting from mid-night of my time till lunch time in London and practically I can't trade those hours due to sleep. Would Type 3 momentum occur densely in London hour only or I'll be fine to reach 10% goal without a lot of stopping out trades ? - I will answer from the end of this set of questions first. You should be able to trade all of the Momentum 3 times without difficulty. One of my traders (Florida) trades while delivering bread. He starts at about 3am EST. Stop size will vary with currency type. I stay away from USDJPY and GBPUSD because of volatility and noise making their risk substantially greater. The EURUSD is more predictable in my opinion. You can make all the money you need to make in one currency pair and in the long run you will be a much better trader. The EURUSD has the best spread, best liquidity and is the most traded which gives it a smoothing affect. My system is based on 4 Levels of Success which is explained in the book. Each trade has a target. I have traders using the system with M5, M15 and hourly.
What max draw down should I expect in Momentum Type 3 shooting for 10% daily goal ? - The goal behind Momentum 3 type trading is no drawdown however 5% is the maximum loss. So if you were trading $3000 as I have been showing,
you would be risking 15 pips. Most of the trades have not come near on hourly charts. Momentum 3 trading has a main purpose, not to drawdown.
Is it feasible to trade a basket of pairs? Per your articles, if there are 6 out of 10 pairs triggered at the same time for Momentum Type 3, the movement is further confirmed. So is it practical to enter all 6 pairs or even 10 pairs at the same time to maximize the profitable trades? However, I understand it is more risky to enlarge the stop out possibility and reduce the total lot size balancing the risk but then end up the same as trading one pair only? I think you have answered your own question. Basket trading is a different animal and I would stay away from this unless you have deep pockets and more of an automated system. The triggered pairs is more useful as an indication that your trade probably has significant momentum. After I've completed your course, what other support do you provide for your students? Is there any forum to share with other students? - We dont have a forum. The Daily Info Newsletter serves to keep trader seeing how to trade. Also, I answer every email from traders using my system in normally under 24 hours. I think Range Shifts and RSI Ranges are easy to see visually after reading the eBook. But I'm not confident to draw channels correctly. So if I draw the incorrect channel, would that deter me from making good trades in RSI Pro signals? - The RSI System is based 95% on the signals. Range Shifts occur in a slow enough sequence that they are difficult to miss and the ideal place to trade them is after the Range Shift has been completed. After trading a short while you will see them much easier. The new Trading Example Vol. 1 ebook has many references to Range Shifts and a few exercises on that exact topic. Channels as I have said are subjective. You dont have to get them perfect although the way I draw them it is very simple to duplicate and the RSI Fundamentals: Beginning to Advanced explains it very clearly. Also, the new Trading Examples eBook shows many illustrations and includes exercises. We are
not dependent on the channels to trade but they aid in the trend direction and the location of trades. In your past articles, you have mentioned Michael Marcus. After I have read more about him, he holds the key to pick low risk trades with large positions as the way to success. Actually, all my time is shooting for this goal but it seems very difficult. Now I can see how the RSI Pro System can achieve this goal. - I did not read about Marcus ideas until about three weeks ago. After I read it I thought, This is exactly what I have been doing. It was good to know that I was doing successfully what he did in the past. He is one of the most successful currency traders of all time. However, The RSI PRO system is an excellent long-term trading method as well. Could I use the RSI Paint indicator on both live and demo MT4 accounts? And, what happens when brokers move to MT5 which is being talked about now because I understand custom MT4 indicators are not expected to run on MT5 without being rewritten? Yes, the indicator works on both demo and live accounts. My programmer is well versed in Metatrader and will adapt the RSI Paint Indicator when and if the time comes. I want to buy the Paint system. Does it come with instructions on how to install it in MT4? - Yes. Its very easy and takes about 2 minutes once you have MT4 downloaded. Paul, just bought Trader's map and I can see it will be a great help to me going forward with the limited time I have to be in front of a PC. This will help me determine much faster whether to take a trade or not since unfortunately, it still is not instinctive yet when looking at an RSI Paint signal. One more thing, while I pretty much have read everything you have, I still struggle with the types of momentum especially types 2 & 3. Either I haven't read a key part of an eBook or have misunderstood the content altogether. Is there a specific part of the RSI Advanced that I should re-read again and again until the light comes up? - I am glad you like The Traders Map. I got the idea from Nassim Taleb the Fooled by Randomness/Black Swan author. He was talking about something totally unrelated (in fact I had no idea what he was talking aboutJ) and the idea came to
me. Momentum 1, 2, and 3 is a relatively new concept for me as well. I am fleshing out the idea in particular in some articles I have been writing for EzineArticles. If you click on the hyperlink in one of the newsletters it will take you to all of the articles. Then scroll through them until you find stuff on momentum. It will be brief as the articles are short but they may help. I plan to make a Momentum Map when I get all of the data together. With the Paint system, does it draw all the lines I see on your charts? Does it also give you a signal to buy or sell? The signal is when the line is drawn at the close of the bar regardless or time frame. An alert is sent in the form of a pop-up on the computer screen with information about each reversal and divergence. The alert can also be sent to your email or cell phone. Does it tell you where to put your stop loss? - The RSI Paint, draws all the signals in for you based on the RRR you set for it. The default is 3.0. Where to place your stop will depend on the type of RSI trading you decide you are going to do and the risk that you want to take. This issue is explored with answers in RSI Advanced: Beginning to Advanced. Great trades!!!!!!!!!!! I'm one of your fans, I inquired about how to buy your trading methodology earlier and you suggested online check. But I Google searched a provider but could not find one that fits me. I'm Nigerian, unfortunately I can't have a PayPal account because of PayPal restriction from citizen of my country. Please notify me when you are able to add a new payment system that will accept payment from Nigeria. We now have Google Checkout for those unable to use PayPal! I understand this is not a signal service you provide. Instead of just providing "fish" for a man your method is to explain and teach one how to capitalize on a reversal/divergence momentum style of trading. Hence being able to actually "fish" for one's self. Total freedom. However .... having said that do you by any chance provide guidance or trade recommendations as to the potential trade set ups to new members? - I have always resisted giving out signals however I do have an EA that trades in a similar
style to the way I trade and traders who have bought my system have and do utilize the signals from that system if they are willing to pay for the service. Traders interested should email me about the system and how it works. COMMENTS The core principle is awesome in the summary of RSI concepts with reinforcement of the learning from the Complete System. This is a super combo supplement. Again, your system is really amazing. Everything works. Compared to all the other systems I have learned, RSI Pro is the ONLY real thing to have trades almost daily with possibility of a low draw down and high reward. From now on RSI Pro is the one I stick to like glue- Anthony
I would be interested in your book Paul. I am quite interested in your use of RSI as I have seen no one else doing anything with it besides Cardwell. Jason Recently got RSI Trader's Map. It really simplifies things for me when looking at Forex charts with RSI Paint Indicator. It allows me to focus on the key items so I can quickly determine the potential success level of a trade when a RSI Signal is generated. Unless you're an experienced trader or have the time which most of us do not have, more often than not, there is too much information to sift through or in my case, you spend time on irrelevant data you see. I'm very happy to have the Trader's Map in my tool box. Rand "I have been doubling my account every 21 days not real aggressive trading still getting the feel for the RSI paint." Rob "Paul, I have got to stop, this system is incredible! Enough pips for the day before I get crazy and lose. Thank you..." Ernest With the change in the world economies over the last couple of years, I have been spending more time trying to come to grips with forex, with its benefits of high liquidity and 24 hour trading. This is proving to be somewhat of a challenge as I try to find a system or method that is consistent and is one that I feel happy with.
Recently, I found out about the depth of the RSI indicator, and decided to carry out more research into it, beyond the basic concepts that you read about in most books. As a result of my search, I found your website and decided to purchase your product, to help me with my understanding of RSI and also for the RSI Paint Indicator, to help me identify divergences and reversals and get me to a level where I can see these patterns without effort. My goal with Forex trading is to rapidly move out of "hobby" mode and into "business mode". I see Forex as a way to earn a living and I want profit from Forex trading to eventually replace my employment based salary. Paul Basically you have given me a way of reading and understanding the momentum in the market. Being able to more effectively vary my trading style to match the current market conditions will make a massive difference to my trading. Damien Just wanted to let you know that I have been using the RSI Paint with great success on many currency pairs. RSI PAINT is the basis of my trading plan. I still have some refining to do to increase my success further, but so far things are going great, over 400 pips just from this week!!! and over 300 from last week. RSI paint is very powerful when used correctly, Im glad I stumbled across it. Thanks again Matt I have taken RSI trading System since 2009 I like the methodology so far, I already have tested other systems and there is none like RSI, I am trying to be better every day. Juan
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