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This SIMPLE Trading Strategy Has A 88.89% Winning Rate

 hey hey what's up my friends so in


training right i'll share with you a
specific trading strategy right that has
a 88.89
winning rate i'll give you the exact
trading rules uh the performance matrix
of this strategy
examples of it and much more so with
that said
let's get started so first and foremost
what is this
trading strategy about and why it works
right so before we get started i want to
say that uh larry connors right he is
the person that i learned from so
credits to larry corners because without
him right
today's trading won't even be available
for you to watch because the idea the
concept the strategy
i learned it from him okay so the the
core idea right behind this
trading strategy is that it's a pullback
stock trading strategy
and here's the thing right why why is
that right because in the long run you
know that the market is the stock market
it's in a long-term uptrend
why the reason is simple because the
stock market tracks
what the economy is doing the reason why
the u.s stock market has been in a
long-term uptrend since 1900s is because
the economy in the u.s in 1900s compared
to today
has improved so much right over the last
100 years or so
same thing for the singapore stock
markets same thing for the china stock
markets right most stock markets out
there they are in a long term uptrend
today's economy is much better than
where we were where we were like
50 years ago 100 years ago okay but
here's the thing just because a
market is in a long term uptrend doesn't
mean that
it goes up in one straight line that
doesn't that is how it works right
because as you know
a market could be in an uptrend but it
has a series of you know higher highs
and higher lows and in the short run
right because of panic selling because
of profit taking because of fear in the
market right
the prices right in the market could go
below its true valuation
okay so this means right that there
exists right
profitable trading opportunities right
for traders like us to take advantage of
and this is what
uh today's trading strategy is all about
we are looking to identify pullback in
the stock markets
we are looking to identify fear in the
markets we are looking for the market to
you know uh
uh to have a sell-off right then we
enter on the pullback and hopefully we
are able to profit right when the market
makes the next swing up higher
so these are the rules right of this
trading strategy we are trading on the s
p 500
market you can do it on the etf you can
do it on the futures it's up to you
uh even if you want to you can test it
on your own local stock markets
you can test it on the russell 1000 you
can test it on nasdaq i'll leave it to
okay again first and foremost we want to
be trading right when the overall market
is in an uptrend so
our way to define the trend is that the
s p 500
must be above the 200-day moving average
so you just pull out your 200-day moving
average if the s p 500 is above it
great now we have permission right to to
trade right if not
we will remain in cash our entry
this is very straightforward right now
entry is also otherwise known as the uh
defining the depth of the pullback we
want the 10 period
rsi to be below 30. okay so this is
how we define our so-called trading
setup right our entry point the 10
rsi must be below 30. once it's below 30
what we're going to do
is that when the market opens the next
day we'll just simply enter
using a market order right whatever
price it is we'll enter on market order
our exit very straightforward as well we
are looking to exit right when the 10
period rsi
has crossed above 40 or after 10 trading
days right because sometimes
the 10 period rsi can be re below 40 for
quite a number of
days or weeks especially during
recession so this is where we have a
time stop right
after 10 trading days uh the market or
rather the 10 period rsi has not crossed
above 40
will also manually exit the trade okay
but if the 10 period rsi has crossed
above 40 then we will simply sell it
on the next days open make sense
so let's have a look at a few examples
shall we
so if you look at this chart what i've
shared with you over here is just simply
the chart of the s p 500 this is the
futures market chart
so let's have a look at how this trading
setup looks like
so you can see this black line over here
we have is the uh
200-day moving average this black line
here so the smb 500 is above it
that's uh that's the first criteria
second criteria
we need is for the 10 period rsi to go
30. so i've pulled out the 10 period rsi
so you can reference it easily over here
10 period rsi
and you can see over here right now the
rsi value is 19.
so this has met our criteria because if
you recall
the 10 period rsi must be below
30. so when the market closes today
right rsi now is trading at 19. so our
i mean our setup is met we are going to
enter on the next day's open
so when the market open the next day
okay we will
simply go long over here okay so what's
the exit criteria it is when the 10
period rsi
crosses above 40 or after 10 trading
so you can see on the next day rsi has
now crossed above
40. over here okay not not exactly the
next day but
two days later rsi has crossed above 40
close at 48. so we'll exit
on the next day open which is on this
candle here we exit
on this candle open so you can imagine
right for this setup your entry point is
here you buy here
and you sell here just capturing this
kind of like this one swing up higher
this one swing
okay let's have a look at another
trading setup
so this time around again the rules are
the same right looking to buy when rsi
is below
30. so we have it over here again look
at this
at this point on today smp is still
above the 200-day moving average so the
overall trend is still towards the
look at the rsi now the value is 28. so
we have the uh the the setup right is
made right because the 10 period rsi is
below 30.
so what we'll do is we enter on the next
day open so next day market open here
so we go along on the next day open our
exit is after 10
trading days or when the 10 period rsi
has crossed above
40. so in this case
here it has now crossed above 40 so we
on the next day open which is somewhere
so we can see we enter here exit here so
thereby just capturing this uh
this uh again this small swing up higher
so this is pretty much how this
trading strategy works right and again i
know this is
just some simple chart examples but so
let me share with you the the matrix
of how this uh trading strategy has
performed so many of you have asked me
right what platform i used to do the
back testing so this one is uh
this platform is called army broker
right you can see that these are the
results right from 1996 right all the
way to
2019 which is the duration of the back
test from 1996 to 2019 about 14 years of
these are the result right of every
trade right that the
trading strategy has taken so you can
look at the
numbers which you can digest easily okay
this is the excel spreadsheet table that
i've exported
you can see that over the 14 years we
have about 36 trades
our winning rate over here is 88.89 as i
mentioned earlier and uh
the average gain right per trade right
profit per trade is about 1.43
and your average loss right on each
trade is about negative
0.87 percent so overall right this is a
uh it seems like you know something that
will give you an edge in the markets
however there is a downside to this and
i'll explain this shortly
so moving on right how can you apply
this to your trading right so first
lesson is this right you want to look
for buying
opportunities right after a strong
quebec in the stock market so when you
the stock market makes a strong pullback
right the
top process that you have right
especially if it's still above the
200-day moving average is that
where can i look for buying
opportunities maybe a pullback towards
uh like for example the time period rsi
is below 30
if you're a discretionary trader you can
use tools like you know candlestick
uh support trendline right to help you
better time your entry right that's one
way you can go about doing it
and one thing to point out is that you
want to avoid shorting the stock market
especially you know i know it's tempting
well strong bearish momentum in the
stock markets right you know it's time
to sell something to shut the market
market is going to collapse
but here's the thing right based on
historical testing right more often than
the price right tends to reverse back up
higher so as much as possible right you
want to avoid shorting
the stock markets especially right if
it's still above the 200-day moving
makes sense and the second thing is this
right so as mentioned earlier i
i said that you know the so-called
downside to this trading system is that
there are
not many trading opportunities right so
as you've seen over the last 14 years we
have about 36
trading opportunities on the smb 500 so
what you can do right to have more
trading opportunities is to
for example you can trade uh more etf
like for example you can trade the s p
500 the russell 1000
russell 3000 nasdaq right all this
together to get more trading
or you can also you know trade
individual stocks right individual
stocks in let's say the s p 500
this will give you more trading
opportunities right to exploit
this uh this is called inefficiency or
in the stock market and if you want to
learn more about how you can actually
apply this concept to trade individual
stocks in the market then i recommend


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