Hey. What's up my friends. So in today's training. You will learn a a stochastic trading system.

That has generated 3588 over the last 22 years and once complete today's tutorial. You will be able to spot trading opportunities like this where you're able to buy over here buy when the market is declining on a pullback and without confirmation on whatever you're able to confidently buy and then to sell the rally over here now you might be thinking. But reyna. What's the catch man why are you always giving all this trading system.

The rules and whatnot what's the catch rainer and the reason is simple my reason for doing all this is because i want to save retail traders from self destruction. I want to save you right from losing all your hard earned money in the financial markets. I want to help you become a profitable trader so in other words. I just want to change this wall and make it a better place and by the way.

If you're a single and you want to change the world do it right now because once you're married you can't even change. The remote control. And that explains a ton of videos that i have on youtube right now first i want to talk about the core concept behind this trading system. This is important because once you understand the concept you can actually use this concept and develop your own trading rules and all trading system right of course.

I'll share with you a specific trading system. That you can use. But the core concept is important because if you want to take things or take matter in your own hands later on right. It's important to understand what the core concept is behind the system number one we want to identify stocks in an uptrend because it's likely to continue higher.

Why is that because stocks in an uptrend. They're usually backed by one of these three things a strong fundamentally sound company. Strong. Consistent.

Earnings or maybe strong positive. Sentiments or sometimes. It could be a combination of all three as well so this is why stocks in an uptrend right usually stocks that have been trading over the last six to 12 months. They are likely to continue higher over the next few weeks or few months.

So now just because a stock is in an uptrend right doesn't mean you know we immediately buy. Because there are a few ways to enter a trade you can buy breakouts by the pullback so for this particular system. We are looking to buy the dip and sell the rally right for a better higher waiting rate so all in all this entire trading system looks something like this you identify stocks in an uptrend you buy the pullback over here and then you sell the rally. Okay so now let's move on and look at the exact trading rules right of this stochastic trading system first thing first market traded which market do we.

Trade we trade the us stock market specifically stocks in the russell. 1000 these are the largest 1. 000 stocks in the us. So they are pretty much liquid easy to enter and easy to exit your trades with no not too much slippages.

The trend. How do we define the trend. We are looking for stocks to be above the 200 day moving average don't worry if you don't understand what this means. I'll share with you some examples later on so you can visualize right all these entire trading rules you know on the chart.

So we're looking for stocks to be above the 200 day moving average because if a stock is above the 200 day moving average. Then we can conclude that the longer term trend is towards the upside. Now entry. When do we enter a trade right first requirement is the 10 period.

Stochastic is below five. Okay we're actually trading. This system on the daily time frame. So the 10 period 10 day stochastic is below five.

You can see over here is the k percentage right so for those of you who are familiar with stochastic indicator. You know that there are two two lines on the indicator. They have the k percentage and the d percentage. We are only focusing on the k percentage and ignoring the d.

Because you don't need that for this particular trading system. So the 10 period stochastic the k percentage deadline is below five and again. I'll share with you the settings later on trading view. So you can you know adjust it to your own needs or rather know how to use the right settings right for this particular indicator.

Okay next one three percent buy limit order so here's the thing right so. Let's say you find a stock that is above the 200 day moving average. Unless you identify that this stock price. The 10 period.

Stochastic is below 5. Does it mean that you immediately enter the trade. No not quite. Because you are still wanting to uh kind of like buy the stock right only when it's temporarily oversold and to do that we place a 3 by limit order this means.

Let's say for example at let's say. The previous day. The stock price closed at 100 a three percent buy limit order means that the next day. You will place a buy limit order of 97 for this stock price.

So if the stock price reaches. 97. You will get fuel on the buy trade. If it doesn't reach 97.

There will be no trade. So that's what a buy limit order that's what a three percent buy limit order means now speaking of the three percent buy limit order. This is like you or rather. This kind of reminds me right of my wi fi.

She doesn't like to buy things on a normal discount. She'd like to buy things at a massive discount to get the most value out of it so it's kind of like similar to this trading system right you can see that when the 10 period. Stochastic is below five this is where you get a discount. But if you wait let's say for the stock to drop another three percent.

The next day and you get filled that's where you are entering your trades at a massive discount right and it pays to listen listen to your wife. Because a story that i heard recently is that recently there was this marriage convention uh event. Okay and during this event. Right the hall.

Right there were two uh two booths over there so the first booth right is for for men right who are dominated and hand packed by their wife that's the first move and the second booth is for men who are not dominated by their wife. So the first booth right men dominated by their wife who got a handbag. The queue is superbly long right to the exit of the door. The queue is still going on that's you know how long the queue is and then the other keyword.

Where men who are not dominated by their wife. There's only one man standing over there right no queue at all just one guy standing. There then the organizer of the event was really intrigued. And he ran up to the guys.

And you say hey man. How do you do it and to which the man replied in this manner. My wife told me to stand here okay so anyway. It pays to listen to your wife right so that's kind of like the point.

I'm trying to bring over here and so that's uh. Why we want to buy stocks at a massive discount. So we not only wait for the 10 period stochastic to be below five. But using also a three percent buy limit order to make sure we get a massive discount now what about exit.

Okay we will enter or rather we will exit right at a higher close when the stock price makes a higher close. We exit this trade as simple as it is i'm still kind of like smiling myself thinking about the marriage convention center anyway moving on right the the other trading rules right is so you will also exit after 10 trading days because sometimes right you can enter let's say after a massive discount right with a three percent buy limit order okay and the damn stock price just keeps going down down down day after day. So what happens is that is after 10 trading days. If the stock price has not have a higher close right you will still exit the trade and it's going to be for a loss right so that's kind of like the worst case scenario.

If you enter the stock price. It keeps going down you hold it for a maximum of 10 days right if it still keeps going down right you'll exit right after 10 trading days. But most of the time right what's going to happen is that you will usually exit the stock right the moment it makes a higher close okay and i'll share with you uh examples later on also right a little bit more to add is that position size we use the 10 capital per stock. So let's say if you have a hundred thousand dollars trading capital you then what it means that you can allocate uh.

Ten thousand dollars to each stock so if let's say you have ten potential trading setups you allocate. Ten thousand dollars to each stock and all your capital. Hundred thousand dollars will be used and for ranking. Very simple right so sometimes you might get let's say you only can buy ten stocks.

But you got 50 stocks to choose from which do you choose you simply choose the top 10 stocks that has increased the most in price over the last 100 days. So that's how you kind of like filter you know which stocks to buy if you have like too many options yeah now let's have a look at some examples shall. We so you can understand how this trading system works in a nutshell but first remember the settings of the stochastic indicator. Which i mentioned earlier.

I just want to show you the settings. So you can see over here. This is again photos of you on trading view. Which i believe 80 percent of the traders are on this platform.

You can see that the k percentage. Over here is 10 right smoothing. I put one and one okay and then you go to style section. Which is this one over here this is the style section.

This is the input section the style. I just hide the d right because it's not needed at the d percentage. I hide it middle band. I hide it and then just press.

Ok you'll get pretty much the same settings that i'm using on trading view. So let's walk you through right. Some of the chart examples of how this trading system worked and just to let you know the charts that i picked they are clearly cherry pick charts because it's easier to prove my illustration. But of course when you trade this system right please verify it on your own you will see losses.

Along the way definitely. I guarantee you okay so first example is this one over here this chart example of uh eog. This is the daily time frame. So remember the first rule is the 200 day moving average.

You can see that this stock price over here right now is above the 200 day moving average number two we're looking for the 10 period stochastic to be below five. So let me point to you exactly which bar on the chart. We are looking at so for this bar on the chart you can see over. Here if i look.

Down right the stochastic level is currently at. 348 over. Here okay so. 348.

For this particular bar over here. So clearly now the price is above the 200 day moving average. The stochastic value now the time period. Stochastic is below five.

So again our first two requirements are meant. But remember we don't just want to buy the stock on a discount. We don't buy at a massive discount because we want to listen to our wife right so okay. So then uh you can see that the next day.

Which is this candle over here. We had the market heading down lower and clearly if you use uh you place. A three percent buy limit order you have cotton field on this uh bearish candle over here this red candle over here so now what about exits. Where do we exit.

Remember. The exit is very simple the moment. The stock price makes a higher close it closes higher for the day. We exit the trade just capture that one small move so you can see over here.

The next day. We had a higher close on this candle over here. The stock price closed higher and we exit the trade and of course when the stock price is closed right we can't exit the trade or unless you have used you know aftermarket hours trading for so for most people you that don't exit you know during the after market hour session you can exit your trade. The following day at the market open.

Which will be and this candle over here. The following day when the market open you exit the trade over here. So. If you do that this would be a nice profitable trade rather.

It's a small small gain. But still again for this particular trade. Okay. Another example over here.

So you understand how this works. Again first thing first stock price above the 200 day moving average. I have actually hidden it here because not to clutter the chart number two all right. The 10 period.

Stochastic must be below five. So i want you to pay attention to this candle over here right where the dotted line is on you can see that the temperature is stochastic at this. Point in time. Right the value is about 42.

As shown over here so you know that it is below five. It has met our requirements now do we enter the trade just yet right no we want to get in at a massive discount so in this case. We place a three percent buy limit order and we have cotton field on this candle over here. So we've got turnfield on this trade.

So okay so the next day. What happened is that the market continued lower against us that happened so we are now in the rate in losses. But remember right we only exit after a higher close or after 10 trading days. So at this point right.

Only uh two trading days has passed one trading day two training day so we're not going to exit because we have eight more trading days to go. But what happened next is that the next day. We have a huge rally where the stock price closed higher for the day that is our exit signal. So we exit right after a higher close.

So once the stock price is closed higher for the day. The following day. We exit our trade at the opening price. Which is over here we exit for a nice gain on this particular trade.

Remember right this i've cherry picked all this just to just kind of to illustrate to you how this trading system works. But when you trade it there will be winners. There will be losers right so let me walk you through uh. The results right of this particular trading system.

Okay. So as you can see over here right the net profit for this trading system over the last 22 years is about 3588 percent. So that's a pretty huge number. So let's analyze this.

Right and that is a no return of about 1781. Right and only over the last 22 years okay. Some people call this the ca gr matrix. If you want to you know uh call.

It that way the other thing is that this system has a winning rate of about 65. Almost 65 and number of trades taken over the last 22 years is about. 373737 right nice number right then the average profit per trade is about. 36.

Percent and the average loss per trade is 373. So you can see that this particular trading system right your risk to reward ratio is slightly less than one to one so every every. Let's say uh every time you you make a dollar right your loss is slightly more than a dollar. So it does so this kind of like you know debunk one of the me right.

Where man rainer. You know trading. One of the hallmark for. Good.

Traders you must have a minimum of a 1 to 15. Risk to reward ratio right in this case is less than a one to one right not even 15. But less than one to one and it's still a profitable trading system. Why why does it happen even though your risk to reward.

Here is not even one to one reason is simple is because you're of your relatively high winning rate. So that's why you win pretty often so sometimes when you lose your losses are more than your winners. But because of the frequency of your wins right this is how the system actually still makes money in the long run. So moving on you can see over here.

This is the equity curve right of it since 2000 to 2021 so again all right generally this equity curve is sloping up higher meaning that this trading system right still works right even to uh up to 2021 where this testing is done and if you want to look at the table. Results you can see over here the full breakdown for example in 2000. It's up 127. If you look at 2021 over here.

This system is up 15 and of course. We have losing years over here in. 2019 we have losing years. 2018 we lost 19.

Not only losing years we also have losing months for example in. 2001 we are down 12 for this. Month we are down 44 in 2006 may right period. So again this system is not the holy grail right.

But if you stick to it long enough using the concepts that i've just shared with you right this system right has an h right in the stock market now. Some of you might be thinking man rainer. Does it work in today's market man renault. Now is 20 22.

Man the s p 500 is down 20 for the year. How's this system doing man. I think it's losing money yeah. So let's have a look i run the back test till.

Uh uh this year end of june right so i'm actually doing this video right now in july. So i run it to the the recent month. Which is the end of june and this is how the system has performed in 2022. So far so 2022 is here right you can see that so far for the.

Year it's down 15. So remember as of right now the s p. 500 is down about 20 for the. Year this system is down a measly 15.

After taking into account commission as well so yes all right you can see that this system still beats the market. But to answer your question does it work in today's market condition. I would say it's not working as well because the overall stock market is down at this point in time. But still right just because a trading system isn't making money let's say during this point of time doesn't mean that you should abandon it why is that very simple.

If you look back historically let's say for example in 2001 september. This system is down 12. If you abandon this system. If you stop trading.

It then you will miss out these gains right in october november. And december and you can see over. Here. Right this particular system is up.

Right 218. Percent right despite being down 12 in september. Right. So if you abandon that system right.

Then guess. What you would have missed out on those gates. And take you to a more recent time. What about 2020 during covet.

A lot of fear in the market. Down four point nine percent in january down four point five percent in march made i mean uh in february. Many traders will panic right they'll give it up as oh man you know market has changed cove has changed everything right now this system is no longer working. But guess what if you look at this system in.

2020 it's up 243 for the year. So the message that i'm trying to say is that if you quit right during the losing months right then you'll miss the upside and the key right to to becoming a profitable trader is to not to avoid the losses. But to embrace the losses to go through the tough times. Because only by going through the tough times will you see better days ahead.

This is the same for all trading system. Because no trading system works all the time because market conditions changes. All the time as you can see right times. Like this right.

Where the stock market is down. Most stock trading systems right will not be doing too well. Even the one. I've just shared with you yes.

It's still beating the markets. But still losing money overall. But what if i tell you that right now. There's actually a trading system right that does very well during such difficult crisis.

Recessionary inflationary period. Might you be interested to learn how we can actually profit in such difficult market condition. If you want right then i'd like to invite you to an upcoming web class called bear market secrets right so this event right. It's a two hour live web class where you'll discover how you can actually protect your portfolio and generate consistent profits even during a recession right and the best part is that you don't need any trading experience.

You don't need to read financial reports you don't need to study chart patterns you don't need to follow the news. None of it okay so during this a two hour life event right you will learn how to avoid losing your heart. And money during a market crash using one simple trick. I'll share with you a powerful trading system right i'll give you the exact trading rules right that has generated 3270 over the last 22 years and it works well right during a recession.

So if you're interested to be part of this live event just come to this page are trading with renaultcom. Bms it stands for bear market secrets put in your name put in your email address click this orange button and you're good to go our next event is starting in july over here. So here's the thing right. Some of you might be watching this video in august september.

Don't worry we'll try to host this event once a month as long as the the recession. The bear market continues. We'll try to host it to educate as many people as possible so just go down to this link trading with rainercom. Bms.

I'll put it below the description box as well so you can click on it and quickly sign up for it and i'll see you at our next event. Right so with that's it i wish you good luck good trading sign up for it and i will talk to you soon.