Hey. What's up my friends so in today's training. I want to share share with you my secret four step trading formula to beat the market. It's my big bad rainer anybody can claim to be the market.

It's not arena. Anybody can claim you know to be a profitable trader. I get it so this is why i want to show you my equity curve. Right from my own live trading.

Account with interactive broker you can see that since 2019. My account is up about 107 right over the last three years. Whereas the s p. 500.

Is up about 48. Okay so you can see over here right. This is my own live trading account. This is the equity curve and you know that i'm not trying to smoke you.

But rather i have you know evidence in my own results to back up what i claim so in today's training. It's not just about me. Because you will also learn not only the four step trading formula to beat the markets. Plus.

A very simple stock trading system. That you can use right. That has generated 2 107. Over the last 22 years ready.

Then let's get started okay. So. The first part of the formula is this right read books right with back tested results. Now you might be wondering why random why do this right so.

Here's the thing right whenever authors they write books with back tested. Results. They usually have you know a gender or purpose behind it for example. It could be to improve their branding or to help them sell more courses subscriptions down the line for their whatever business.

Like me for example right to help me sell more courses down the line or maybe people who run hedge funds. They write books people will learn of their funds. And maybe eventually put money and invest with their hedge funds. So you can see that whenever authors right they write.

Trading books. They really have a purpose behind it. And if you think about this right. No sane author.

No sane trader. Who write a book right will want to write something that doesn't work because it's going to take a huge hit to their reputation right. No no one with a sound mind will do that so this is why reading books with back tested results. It's kind of like your shortcut right to finding trading success.

Because traders. Veteran traders. Experts they have already been through it right and are pretty much you know sharing. What is working right in the markets right so now you might be thinking.

But rain are there hundreds there are thousands of books out there how do you know kind of like filter you know all these different books out there so to make your life. Easier here are three books right that you can consider reading number one following the trend by andreas cleno number two we shot them trading strategies that worked by larry connors and cesar alvarez and number three unholy girls binding right so you can screenshot this and save it you know and you can you know start with this part of the formula right in your trading journey. Okay. So the second part of the formula is this right extract the concepts.

So let me share with you a true story. So back. When i was in secondary school. About 15 16 years old you can see that this is my exam report.

I kid you not right this is me a rainer right when i was in secondary four. And you can see that i have failed right pretty much every single subject over here except for this one over here. Except for this subject can you guess right. Which subject.

I passed among all the three four five six seven subjects. I took right the answer is this i only passed my english subject so this shows right if you're going to be a trader. If you want to be a youtube uh personnel personnel right you only need english to pass right uh in school. Right.

So just kidding right don't don't fail right if you can right so anyway. I only passed english right in secondary school and if you look back right uh in university. You can see that i actually graduated right with uh first class honours over here as you can see right again. And this is my name and this is somewhere in 2011.

Yeah. So i might be thinking right now. So what's what's the secret. How do you go from being an f student to someone graduating with first class honors.

So the secret is this back when i was in secondary school failing every single subject the reason why that happened is because i was pretty much memorizing. All the questions and answers and praying they kind of like come out in the exam. So you know i hit a chatbot right. Imagine you you memorize for this question.

That answer. An exam come out the same question and answer you get it well. It feels really good so that was that was what i was doing in secondary school. And clearly it didn't work out for me so when i go on to university.

I know that clearly that concept that strategy is no longer working so what i did right is i started understanding concepts right that are being taught in school. So. When i learn a concept when i learn a principle the school can change the question the answer no matter how if i still understand the concept. I can still answer that question correctly so this was one of my biggest aha takeaway right that i got away from school is that don't memorize.

You know questions answer don't memorize stuff instead. Understand the broad based concept. Because this will kind of like help you right down the line right. No matter.

You know how they change and twist. The questions once you understand the concept things you know will work out for you and it's the same for trading. I realize right when you extract the concepts right from all these trading books. That you have read this is really what matters.

So you might be thinking brain. What's the difference between a concept and a tactic. So let me explain what's the difference between the two so concept is for example right a trend. That is a concept right you want to write a trend.

You know using a trailing stop loss the tactic to execute this concept could be something like you know use the 50 day moving average to trail your stop loss. So you can see that the tactic. It can always change right you don't have to use a 50 day moving average you can use a chandelier exit you can use maybe a 25 day moving average to trail your stop loss. There are many ways to trail your stop loss.

But what doesn't change right is the concept the concept of riding a trend. So having the concept of writing a trend. There are many ways to execute it right you know using different types of trailing stop loss different parameters right so the concept comes first right then the tactic right to you know execute the concept. But hopefully you know this makes sense right because.

This is very important okay step. Three is to test the trading system right this reminds me of a story back when i was in i think in secondary school. When i was about 13 or 14 years so we have this thing called neoprene right so neoprene is kind of like a sticker right where the person. We can take you know a photo at the photo booth.

Then they come up the the photos right in the form of a sticker. It can kind of like share. It with your friends and then whatnot. So i had this new printer of this girl that i met i'm not even sure how i got caught a neoprene.

But you know i received a new print. I thought hey this girl looks really sweet right so we were talking smsing each other for about three to four months and finally right one day. I'll schedule you know a line and we can you know meet up right in person. So we decided to meet some random arcade in singapore.

And when i was there right. I felt that someone tapped me on the back you know hi. When i look back right. I got a shock of my life right because that girl clearly didn't look like how she was supposed to look like on a new prince.

I know exchanged you know pleasantries. Hello bye bye and that was uh bye bye forever. I never you know meet her ever again. So.

This kind of reminds me also right that when you guys and girls are on dating apps right for example you see the guy oh he got six packs. But when you meet him you need one big pack. Oh you mean the girl right. She looks very slim on the photos.

But you come up and see her in person. It's not quite as slim so same thing over here right same thing for trading right. When you see a trading system. That is supposedly to work in the book right.

But when you actually trade it in live markets. It doesn't work so why is that that's because you must always test. The trading system right you never ever right trust anything verify everything whether you're dating girls whether you're meeting someone on a dating app. Whatever you don't trust those digital pictures right you have to see the real thing so same for trading.

You don't trust those rules or whatever strategies people are sharing right you have to test it out on your own right to see whether it works or not and this is why in later in today's training. I will share with you a simple trading system right. I have tested that has generated 2 107. Over the last 22 years.

I'll share with you the exact trading rules and much more right so with that let's move on number four tweak the trading system. This is so important because there's no point right giving you let's say a day trading system. A day trading strategy. If you are someone who have a full time job because day trading requires you to you know be glued in front of your monitor pretty much all the time.

And if you have a full time job. There's no way you're going to execute the day trading system. It's kind of like you know no point driving. A toyota to win an f1 race.

Because by the time right you finish one lap. The race is over make sense. So this is why you want to tweak the trading system to your needs to your goals. Right so once you can do that right you can actually have a high chance of following your trading rules and to achieve your goals.

So with this right let's do a quick recap behind this formula. The red trading formula. Number one you want to read books with back tested results. Number two extract the concepts behind it so you can develop your own trading strategy.

Number three test. The trading system and number four tweak the system to your needs now at this point you might be thinking. But right now how do i actually apply all the steps into the real world of trading well that's what you're gonna find out right now okay. Now i want to share with you a proven trading system.

That has generated 2 107. Over the last 22 years using the red formula right so let's get started. So. What does.

The r stand. For in the red r. R. A.

No stands for read books. With back tested results. So in this example right i read the book called short term trading strategies that worked by larry connors and cesar alvarez next step we want to extract the concepts right so. What is the concepts that i extracted out from this book over here so let me walk you through number one.

I realized that strong performing stocks right they are likely to continue higher especially in the stock markets right because strong performing stocks are stocks. Which are in an uptrend. They are likely fueled by no consistent strong earnings positive sentiments good you know management whatsoever and they are likely to continue higher over the next few weeks or the next few months. So this is why strong performing stocks are likely to continue higher.

Number two stocks don't go up in one straight line or rather any markets that you see right it doesn't go up in one straight line right when the market is in an uptrend. It goes up pulls back goes up pulls back goes up pulls back and then goes up higher. So once you know how the market moves right higher high and higher low. You can actually time your entry on the pullback.

So this is what we we want to do to buy the plug and for this particular trading strategy since it's a mean reversion trading strategy. We're just looking to capture that one swing in the market. So we want to sell the rally. So in essence right.

What we are trying to do over here is to identify stocks. Which are in an uptrend. Okay. We want to buy the pullback over here and then we sell the rally up higher.

That's pretty much it that's kind of like the entire concept behind this trading system now from this concept that you've learned we will need to translate it into rules right rules that can be tested so let me share with you a simple trading system right with the exact trading rules right so test as trading system number one market we will be trading stocks and russell 1000 index so basically the largest 1000 stocks in us. These are the stocks that we will be trading so we are going to classify the markets. We are trading number two how do we define the trend. So one way to do.

It is that the stock must be above the 200 day moving average right so this means that if a stock is above the 200 day moving average. Then only then will we consider looking for buying opportunities. If the stock is below it right we won't touch the stock at all next one define the pullback. How do we define the pullback so in this case.

We are using the bollinger band where i use we will make sure that the stock right has closed 25. Standard deviation below the 20 day bollinger band. So this is how we define the pullback. The stock has to close below the lower bollinger band right and the lower bollinger band is defined by using a 25.

Standard deviation away from the min or rather from the center. Bollinger band line. I'll share with you some examples later on next one right entry right so we not only want the stock price to close below the lower bollinger band right do we also want the stock right to actually trade three percent right below the uh previous day closing price. So for example.

Let's say this over here is the bollinger band right let's say. The stock goes up comes closes below this lower bollinger band. The next day. The stock must drop another three percent right let's put your minus another three percent drop down another three percent right before we will get filled on the trade.

So in other words you're trying to buy stocks. Which are short term oversold. Right. So the stock has to fall another three percent lower the next day.

Right before we get filled on this trade. So if the stock closes below the lower bollinger band. But the following day it did not drop another three percent right. We will not be in the trade.

So this is pretty much having a buy limit order right below the previous day closing price to make sure that we are buying stocks which are short term oversold and what about exit right very simple we're just looking to sell when the two period rsi crosses above 50 or after 10 trading days right sometimes if the stock continues to go down lower and lower right where the rsi doesn't cross above 50. We want to have like a time based stop loss if after 10 trading days. It still has not crossed above the uh two period rsi. We will still exit the trade right to cut our laws right so next let me share with you some examples right of how this trading system.

Looks. Like now let's have a look at some examples right of this trading system and by the way. The examples that i've chosen they're all cherry pick charts right and they're all winning trades. But later on as you when you see the results right we have no losing uh trades as well.

But for now. The trading examples they're all cherry pick and they're all winners. So because it's easier to illustrate the examples so first thing first right this stock you can see it's in an uptrend right uh. I did not add the 200 day moving average.

But if you overlaid you can see that this stock is actually above the 200 day moving average. I didn't edit because i didn't want to clutter the charts with too many indicators second thing the pullback remember we are looking for the stock right to close below the lower bollinger band. In this case. We are using 20 period.

Bollinger band 20 period 20 day 20 period right on the daily time frame and then the standard. Deviation we're using 25. Standard deviation. Okay.

So you can see the bollinger band settings over. Here this is the 20 period and 25. Standard deviation. So now where is our signal right so the signal actually occurred over here you look at this candle.

Over here. This is where the stock price closed below the lower bollinger band. Okay so does it mean we immediately enter the trade. No not quite because we still need to place a 3 by limit order below the previous day closing price.

So you can see this is the closing price over here and the next day. The stock deep uh actually traded slightly lower. And we actually got filled right because it actually hit our three percent buy limit order. So we've got fuel right somewhere near the lows.

Let me just remove the lines right. We've got field somewhere near the lows of this candle over here we have gotten filled on this trade. Now what about exit remember we exit when the two period rsi crosses above 50 or after 10 trading days. Whichever comforts so here is the two period rsi you can see over here and over here on this on this one over.

Here. You can see that two period. Rsi actually did cross above 50 on this particular day on this day two period rsi crosses above 50. So we're going to exit the trade the next day so the next day when the market open over here.

This is where we exit this trade for a small profit. So one more example okay over here this one over here plug power again i did not add in the 200 day moving average. But if you do right you can see that this stock is above the 200 day moving average as well next one right so remember what is our signal right. We're looking for a pullback.

Waiting for the stock price to close below the lower bollinger band. Which happened on this candle over here. But it doesn't mean that we immediately enter the trade because we want a stock right to continue down lower. That's why we have this uh buy uh three percent buy limit order.

So if the next day. The stock price drops down another three percent lower. We will have our buy limit order being filled so that actually happened on this candle over here right the next day. The stock price did trade down lower by another three percent.

We got filled on the trade what about exit again very simple right over here the two period rsi crosses above. 50 right you can see here right now it's 71 this candle here the rsi is currently at 719. So this means that next day when the market open. We will sell this stock right and possibly for a profit as well unless you know the market kind of gap against us.

So. This is how the trading set up the chart examples look like right. Including the entries and exits. Now what about results earlier.

I mentioned that these are cherry pick charts. But in the real world of trading you have winners you have losers and i'm not going to hide it from you you can see this is the back tested report okay so over the last 22 years. This one is has generated about 2. 107 in terms of analyze percentage return is about 151 percent and no return over the last 22 years winning rate is about 67.

As you can see over here for this system and maximum drawdown is about 23. If you're interested in all this data you can just pause this screen. And you know analyze all this data or better still go and test this trading system on your own and see what you get right. That's the hallmark of a professional trader okay so moving on this is the equity curve over the last 22 years you can see that i backtested.

It from 2000 up to 2021 still you know making new higher highs and higher low. So this system clearly still even still working even in today's market next. One tweak the trading system as mentioned right there are many ways that you can tweak the system right to suit your needs to your goals. So to give you some you know ideas right what you can do number.

One you can do is could you consider trading this concept or system on other markets maybe on the s p 500. Maybe on the australian markets maybe on the singapore markets. The philippine markets could that be possible well test to find out next one different entry trigger. So we use this in this case.

We use the bollinger band right when the stock price to close below the lower bollinger band to define us our entry trigger. But that's not the only way what if you use let's say. The 15 day load at 20 day low. What if you use a percentage.

You know drop in price. The stock price is dropped. You know three percent for three days in a row. That's that are you know other ways that you can define the pullback right in your trading system or how about this you can hold the trade longer to capture a bigger swing.

So maybe instead of you know waiting for the two period rsi to cross above 50. What if you change it to five period rsi to cross above 50. This way you're you know holding the trade a bit longer to capture a bigger swing might that be possible you have to test it to find out and by the way. If you have enjoyed today's training right then i'd like to invite you right to an upcoming event called stock trading secrets during this event.

I'll share with you another more powerful trading system right that has generated 325 over the last 22 years. I'll share with you how we can take a small training account right to grow it into six or even seven figures and beyond right using you know a proper risk management. So you don't blow up your trading. Account plus.

I'll share with you the secret right to profiting almost every single year from the financial markets even during a bear market or recession. Like what we are experiencing right now. So. If you're interested to join me for this free upcoming web.

Class just go down to this link over here trading with freedomcom. Sts. The link is over here. I'll put somewhere in the description below so you can access.

It easily. Then just fill up your details over here name and email address. Then there's this orange button. You just click on this orange button.

And you will be registered for this free upcoming web class. I know the next one here is on 26th of june. But if you're looking at this video. Which is really july august.

No worries because i try to host one of such event every single month. So just come to this register and i will see you at this free upcoming web class. I'll talk to you soon take care.