[Do you really need both Stochastic indicator & RSI?]
Well, they are similar but different.
I’ll explain…
The stochastic indicator and RSI are similar because they are both momentum oscillators.
In other words, they measure momentum in the market and their values range between 0 and 100.
But how are they different?
Well, the calculations that go into the stochastic indicator and the RSI indicator are different.
However, they use the same concept which is to measure momentum.
Thus, you shouldn’t be surprised to see both stochastic indicator and RSI pointing in the same direction (albeit with different values).
So, the bottom line is this…
If you want to use a momentum indicator (like RSI or Stochastic), just pick one will do because they pretty much tell you the same thing.
Well, they are similar but different.
I’ll explain…
The stochastic indicator and RSI are similar because they are both momentum oscillators.
In other words, they measure momentum in the market and their values range between 0 and 100.
But how are they different?
Well, the calculations that go into the stochastic indicator and the RSI indicator are different.
However, they use the same concept which is to measure momentum.
Thus, you shouldn’t be surprised to see both stochastic indicator and RSI pointing in the same direction (albeit with different values).
So, the bottom line is this…
If you want to use a momentum indicator (like RSI or Stochastic), just pick one will do because they pretty much tell you the same thing.
Exponential Moving Average Strategy Guide
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Bullish Candlestick Patterns Strategy Guide
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[Don’t use a fixed position size, do this instead…]
Most traders are fascinated with technical analysis, candlestick patterns, trading indicators, etc.
When you see “something” nice, you quickly hit the buy button without giving much thought to your position size—which is a big mistake.
Why?
Because without proper position sizing, your wins and losses are erratic.
Here’s an example:
Let’s say you buy 1 standard lot of EUR/USD with a stop loss of 20 pips.
How much could you lose?
Well, it’s a potential loss of $200 (20 x $10/pip).
Now, what if you have 100 pips stop loss?
It’s a potential loss of $1000 (100 x $10/pip).
You might be thinking:
“My stop loss in terms of pips will be the same.”
“This way, I can keep my losses constant on each trade.”
That is possible but…
What if you trade a different timeframe where it doesn’t make sense to use the same number of pips as your stop loss? (E.g. A 20 pips stop loss might work on the 5-minutes timeframe but not on the daily.)
Or what if you trade a different currency pair with a different pip value?
Do you see my point?
So the lesson is this…
The size of your losses should be the same for each trade.
But your position size should be adjusted according to the size of your stop loss.
A tighter stop loss allows you to increase your position size.
A wider stop loss requires a smaller position size.
Most traders are fascinated with technical analysis, candlestick patterns, trading indicators, etc.
When you see “something” nice, you quickly hit the buy button without giving much thought to your position size—which is a big mistake.
Why?
Because without proper position sizing, your wins and losses are erratic.
Here’s an example:
Let’s say you buy 1 standard lot of EUR/USD with a stop loss of 20 pips.
How much could you lose?
Well, it’s a potential loss of $200 (20 x $10/pip).
Now, what if you have 100 pips stop loss?
It’s a potential loss of $1000 (100 x $10/pip).
You might be thinking:
“My stop loss in terms of pips will be the same.”
“This way, I can keep my losses constant on each trade.”
That is possible but…
What if you trade a different timeframe where it doesn’t make sense to use the same number of pips as your stop loss? (E.g. A 20 pips stop loss might work on the 5-minutes timeframe but not on the daily.)
Or what if you trade a different currency pair with a different pip value?
Do you see my point?
So the lesson is this…
The size of your losses should be the same for each trade.
But your position size should be adjusted according to the size of your stop loss.
A tighter stop loss allows you to increase your position size.
A wider stop loss requires a smaller position size.
Do you want to read the price action of the markets like a professional trader?
Then download a FREE copy of The Ultimate Guide to Price Action Trading.
You’ll learn how to better time your entries, “predict” marketing turning points, identify explosive breakout trades about to happen, and much more…
Click the link below and grab your copy, it’s free!
https://www.tradingwithrayner.com/ultimate-guide-price-action-trading/
Then download a FREE copy of The Ultimate Guide to Price Action Trading.
You’ll learn how to better time your entries, “predict” marketing turning points, identify explosive breakout trades about to happen, and much more…
Click the link below and grab your copy, it’s free!
https://www.tradingwithrayner.com/ultimate-guide-price-action-trading/
How to reduce your fear of trading:
Don’t go all in.
Manage your risks.
Reduce your position size.
Trade with a strategy that offers an edge.
Not more than 50% of your wealth in the markets.
Don’t go all in.
Manage your risks.
Reduce your position size.
Trade with a strategy that offers an edge.
Not more than 50% of your wealth in the markets.
The Essential Guide To Fibonacci Trading
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[If you’re a newbie trader, avoid this habit of averaging into losses]
Imagine:
You bought 1 lot of EUR/USD at 1.3000.
Shortly, the price dropped 50 pips and you’re down $500.
Now you’re thinking to yourself…
“I knew it, the market is out to get me again.”
“But wait… if I buy another 1 lot of EUR/USD, then I can quickly get out at breakeven if the price moves up 25 pips.”
“I’m a genius!”
So…
You buy another lot of EUR/USD at 1.2950.
Next thing you know, EUR/USD tanked 100 pips—which puts you at a loss of $3,500.
In other words…
If you had cut your loss from the start, it would have only been a loss of $500.
But because you gave in to your emotions and averaged into your losses, it grew into a $3,500 loss.
So the lesson is this:
If the market proves you wrong, get out of the trade.
Don’t average into your losers because it could snowball into something near impossible to recover from.
Imagine:
You bought 1 lot of EUR/USD at 1.3000.
Shortly, the price dropped 50 pips and you’re down $500.
Now you’re thinking to yourself…
“I knew it, the market is out to get me again.”
“But wait… if I buy another 1 lot of EUR/USD, then I can quickly get out at breakeven if the price moves up 25 pips.”
“I’m a genius!”
So…
You buy another lot of EUR/USD at 1.2950.
Next thing you know, EUR/USD tanked 100 pips—which puts you at a loss of $3,500.
In other words…
If you had cut your loss from the start, it would have only been a loss of $500.
But because you gave in to your emotions and averaged into your losses, it grew into a $3,500 loss.
So the lesson is this:
If the market proves you wrong, get out of the trade.
Don’t average into your losers because it could snowball into something near impossible to recover from.
10 Price Action Trading Tips You Can Learn in 10 Minutes (So You Can Get Results Fast)
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Trading can never replace the consistent income of a job.
Because it’s not a job—it’s a business.
Because it’s not a job—it’s a business.
What Is A Trading Journal? (A Detailed Guide)
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Trading = Spending years to acquire a skill so you can be free for the rest of your life
Intraday Trading: 4 Things You Must Know If You Want To Succeed
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[It sucks, but just let the price hit your stop loss]
Imagine:
You buy 1 standard lot of GBP/USD at 1.4300 and have a stop loss at 1.4250.
This means if the price drops to 1.4250, you will exit the trade for a loss of $500 (or 50 pips).
Now, this is fine if you allow your stop loss to do its job.
However, you might be thinking…
“I know the market is about to rebound.”
“I’ll look like an idiot if I were to sell right now and only to watch the market reverse higher.”
“Let me hold on to the trade for a while longer and sell at the next rally.”
And what happens next?
The market collapsed another 500 pips.
Eventually, the pain is too much to bear and you forced yourself to exit your position.
And because of your hesitation, a $500 loss amplified into $5,500.
So, the bottom line is this…
Honour your stop loss.
It’s there to protect your trading account even though it’ll make you look like a fool once in a while.
Imagine:
You buy 1 standard lot of GBP/USD at 1.4300 and have a stop loss at 1.4250.
This means if the price drops to 1.4250, you will exit the trade for a loss of $500 (or 50 pips).
Now, this is fine if you allow your stop loss to do its job.
However, you might be thinking…
“I know the market is about to rebound.”
“I’ll look like an idiot if I were to sell right now and only to watch the market reverse higher.”
“Let me hold on to the trade for a while longer and sell at the next rally.”
And what happens next?
The market collapsed another 500 pips.
Eventually, the pain is too much to bear and you forced yourself to exit your position.
And because of your hesitation, a $500 loss amplified into $5,500.
So, the bottom line is this…
Honour your stop loss.
It’s there to protect your trading account even though it’ll make you look like a fool once in a while.
Market Wizards: 4 Things I’ve Learned That Improved My Trading Results
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Trading is not a job.
It’s a business.
An identity of the 5%.
An individual who is in control.
A belief that you can achieve when others fail.
An expression of your thoughts, feelings, and attitude—without discrimination.
Trading is freedom.
It’s a business.
An identity of the 5%.
An individual who is in control.
A belief that you can achieve when others fail.
An expression of your thoughts, feelings, and attitude—without discrimination.
Trading is freedom.
Trading in the zone: 8 Powerful lessons I’ve learned from Mark Douglas
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Do you want to read candlestick patterns like a professional trader?
Then download a FREE copy of The Monster Guide to Candlestick Patterns.
You'll discover how to "predict" market turning points and better time your entries & exits—even if you have no trading experience.
Click the link below and grab your copy, it’s free!
https://www.tradingwithrayner.com/candlestick-pdf-guide/
Then download a FREE copy of The Monster Guide to Candlestick Patterns.
You'll discover how to "predict" market turning points and better time your entries & exits—even if you have no trading experience.
Click the link below and grab your copy, it’s free!
https://www.tradingwithrayner.com/candlestick-pdf-guide/
[Make it painful to not follow your trading plan]
Here’s the thing:
Just because you have a trading plan doesn’t mean you won’t have itchy fingers.
Because you might lack the discipline to follow your trading plan even though it’s good for you.
(Kind of like how you don’t eat enough vegetables even though you know it’s good for you.)
The solution?
Be accountable to someone. It could be your spouse, a friend, or someone you trust.
Let them know whenever you deviate from your trading plan, you’ll be penalized.
The penalty could be something like:
— $50 donation to your favourite charity
— Wash the toilets for a week
— Do 100 push-ups
You want to make sure the pain of not following your trading plan is greater than following it.
This way, the mind gravitates toward the least amount of pain which is to follow your trading plan.
This means your actions become consistent and you get consistent results.
Here’s the thing:
Just because you have a trading plan doesn’t mean you won’t have itchy fingers.
Because you might lack the discipline to follow your trading plan even though it’s good for you.
(Kind of like how you don’t eat enough vegetables even though you know it’s good for you.)
The solution?
Be accountable to someone. It could be your spouse, a friend, or someone you trust.
Let them know whenever you deviate from your trading plan, you’ll be penalized.
The penalty could be something like:
— $50 donation to your favourite charity
— Wash the toilets for a week
— Do 100 push-ups
You want to make sure the pain of not following your trading plan is greater than following it.
This way, the mind gravitates toward the least amount of pain which is to follow your trading plan.
This means your actions become consistent and you get consistent results.