Hello, my friend, and welcome to this tutorial on Stock Market Day Trading. In this post, we talk about a simple 3-Step Forex trading strategy that works in today’s market – one of many Forex Trading strategies that even beginners can learn from. Enjoy!
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Forex Trading Strategy That Works – Video
Hey, my good friends. Barry Burns here with Top Dog Trading. Today, I’m going to show you a terrific setup. This is a genuine gift that I’m giving you today. I’m going to show you a forex trading strategy that works in today’s market.
However, you can trade this with stocks, futures, forex, day trading, swing trading, and it applies to finding a very dominant energy and then trading and follow-through in that direction. So before we get there, I’ll be using the RSI here today, my favorite indicator. Though, my own proprietary indicator is more accurate. You can get that at indicatorwebinar.com.
I’ll spend an hour with you and show you that one. Today though we’re going to use the good old-fashioned RSI. So, by the way, this is part of an overall trading methodology, but a very good part of it. So, what do we have here?
Misconceptions about the RSI Indicator – Forex Trading Strategy That Works
One of the challenges, misconceptions that people will see is that they’ll say, “Wait a minute, we’re at a previous high and we’re also in overbought territory.” Because usually, 70 is used as the overbought line. No, that is incorrect. The data you’ve been taught is completely the opposite.
what you’ve been taught is completely the oppositeBarry Burns
In other words, that is 180 percent wrong. When the RSI, which is a strength indicator, reaches 70, that means we have a strong bullish move and the indication is that it will continue to rise, not that it’ll drop. So, we get a little retrace here, which is exactly what we want. It comes back up here and that’s what we’re going to do. We’re going to go long with that.
I got to let these arrows go. So, let’s clean this up a bit and I’ll show you the pattern. There are multiple parts to this pattern. Again, you’d want to make this part of a complete trading methodology, which I’d be happy to show you on the webinar. But let’s just show you this for today.
Breaking Down the RSI Trade Setup – Trading Towards the Upside
So, the first thing we look for on the RSI is strength up, indicated by it reaching the level of 70. We want impulse moves up on strength, showing professional buying. We look for a retrace. This is a retraced trade, not an outbreak trade, we want that retrace bottom to come at a previous high. Okay, so that’s the key.
As it enters, we get the strength movement here, we get the retrace to that high, and that’s where we’re going to be looking to buy a continuation to the upside. Nothing overbought about this, in fact, the opposite. So again, three steps. One is to get to the 70 level with our RSI strength to the upside. Okay, step two is to look for a retrace and hit support at a previous swing high.
And step three is to then just trade it long. Now, you could take it a lot of people take it and enter over this high. That’s great if you want to buy retail. I like to buy wholesale myself. I prefer to buy wholesale, especially when trading.
Why People Lose Money Using the RSI Indicator
So what we’re going to do is we’re going to buy this low. Now, that’s what I’ll show you at the indicatorwebinar.com, be there live with you and show you how to nail these lows within a penny, pip, or tick. That’s how accurate we can get those. However, this is the big pattern and if you want to trade it on its own, well, go ahead and test it out.
It’s a really good pattern. Let’s see what happens then. Just for laughs, it keeps rising. Notice, by the way, people who call this overbought, did it stop being overbought here? No.
Did it stop being overbought here? No. It continued to go up. Even higher, didn’t it? Nothing overbought about this.
That’s incorrect. That is not the way to read that. And then we continue to rise, and then the market consolidates for a while. Now, let’s look at this one.
So actually, we get another signal in the opposite direction. Now, let’s look at that again. What do we have here? Market comes down. So where does that happen?
Trading Towards the Downside – Forex Trading Strategy That Works
It happens right there. Okay. So now it hits what a lot of people call the oversold level of 30. So it should go up, right? Nope.
It’s not rising, it’s still dropping. So we are now looking for short extensions. We don’t want to lose our shorts. We want to keep our shorts on. Now, people who would buy this, what are they going to do?
They’re going to fill their shorts because they’re going to lose money. They’re going to get stopped out. So now, again, looking for a previous level to short off of. Actually, people are going to buy that and fill their long positions.
That’s what happens when you try to be too cutesy. But you get the idea. The dynamic is that the relative strength is actually to the downside. See, here’s the problem. It’s not a problem, it’s just the reality.
The Reality of Using the RSI Indicator
This indicator is bounded. It’s only allowed to go from 0 to 100. So these are artificial floors down here and these are artificial ceilings up here. So what we’re really looking for is, as I said before, strength to the downside and then to look for a retracement to resistance and then follow through on strength to the downside. Here, we look for strength to the upside and then continuation strength to the upside.
stick to the principleBarry Burns
So that’s the basic concept. Stick to the principle and there it goes down. Quite a good move. And as you can see, as the market continues, it just goes sideways here. You have support going sideways and then guess what?
Oh, there it goes again, made an even lower low. After that, because why? We got no strength to the upside and everyone back here can hit 70 to the upside. And so, therefore, the relative strength is still to the downside. It keeps going sideways.
Avoid Trading Sideways Market – Forex Trading Strategy That Works
This is all just kind of meandering sideways. So basically, there you go. That’s a rough market and we don’t want to trade rough markets because they can chop up our trading account. So I’m going to go take some speech lessons and I’ll be back with the next video. But take the concept.
It’s very powerful, works great. Test it out for yourself. Obviously, don’t trade this with real money until you’ve proven to yourself that it works. Practice test it, demo test it for a period of time. You can backtest it if you want.
And I would add a few additional things. Now, we’re just using positive strength, bearish strength, and support resistance. I like to have my timing indicator to get in at the exact tick. Go over to indicatorwebinar.com, pick that up, spend an hour with me, and by the way, we’ll be live. I’ll answer any questions you may have about it.
And then there are a few other energies here too, like money flow, that I would add into this for a complete trading methodology. And hopefully, it goes without saying that you also want to use flawless risk management and impeccable money management.
And finally, I am offering one of my favorite trade strategies called the Rubber Band Trade. Absolutely free. And I want you to go and make some money. Try before you buy, or well, actually try and never buy because there’s no charge for this trade at all. And I’ll give you the setups, the exits, all the rules for it. It’s an objective rule-based method based on price pattern action that I don’t think anyone else teaches.
I’ve never seen anything else teach this particular price structure. So go get that by clicking on the green icon in the top right-hand corner of the video there, or by clicking on the green button below, and that’ll take you to a page where you can opt-in, get the video for the rubber band trade strategy, along with some other great free tutorials, one of my little mini-courses, absolutely free, courtesy of Barry Burns here at Top Dog Trading.
GET MY FREE MARKET ENTRY TIMING INDICATOR
BTW, if you’re interested in the indicator that I use personally for very precise entries and exits. I’m happy to share that with you. Just send me an email at firstname.lastname@example.org, and I’ll show you how to get access to that indicator.
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