Retail, prop, and back to retail - RSI Divergence Trading

I have written 4 Threads before this one.

I used to be very green when it came to trading, I think I still am, but in different ways. I used to think the world of charts and have every bit of confidence in how I traded them. I used to get some good results and some not so good results and knowing that it was all part of the learning curve helps to keep you going when the results keep coming back crap.

Just like most traders on here, I've jumped from system to system, Renko, HA, Dashboard, Naked candles, Line charts, HH's/LL's, swing, scalp and invest. The only 2 successes I've had out of all of that and 4 years in the process, are RSI and naked candle trading systems.

Learning a lot from one particular trader about mindset when it comes to naked candles and teaching myself the in's and out's of the RSI divergences, I noticed a few things in the differences between RSI divergences and the chart.

Signing up to test at a Prop firm was one of the best thing for my trading, they taught me a boatload!
Unfortunately had to leave for other commitments.

So, will be writing journal entries in here to keep me going and keep learning from my mistakes (and your input if you want to give any opinions), and sharing the basic system that I'm sure many people use already.



The System:

Contracts: AUD/USD and USD/JPY only.
Trading Aussie, because it's cheaper on margin, and trading USD/JPY as it's the closest currency pair I can get to trading based on US 10yr Note Treasuries contract.

Frequency: 10-30 trades per day. No more, no less.

Risk parameters: Profit - 3-5 pips; Stop - 3 pips; Scratch = 0.8 pips profit.

Lot size: Half of largest allowable, i.e If I'm able to trade the 1 lot, then I will trade 0.5 lots.

Time frames: 5/30 minutes and occasionally 60 minutes.

Basic principles

1. Price action cannot change direction without a Divergence between price and RSI on either of the time frames.
2. Where a low is made on PA, it must also be true for the RSI, and vice versa.
3. Where a high is made on the PA, it must also be true for the RSI and vice versa.
4. Trying to trade every single direction, and using divergences for minor entries

Trying to learn from my mistakes, I will have many.

Will wait for the 5 minute candle to close, and see if both RSI and PA find the low
http://puu.sh/wNajt/77345da03e.png

+3 pips,
now must wait for the end of the 30 minutes to get back to center.

http://puu.sh/wNaE7/6dbcc01925.png

Will we get the lowest point on the RSI?

http://puu.sh/wNaTX/aa1c7e9eb4.png

Loss of 2 pips, must remember, If you take a trade at the start of a new 30 minute candle, your view must be synchronized with that time frame.

Just too early....

this is going to be a long road.

http://puu.sh/wNbvS/49bfe68760.png

Being early is the same as being wrong.

Bought on the last red, turns out I had a trailing stop that took me out. bloody trailing stop haha

http://puu.sh/wNcET/0dd8b34bb4.png

Here we go again

http://puu.sh/wNdHl/04d0bc9994.png

NO TRADE

rsi, divergence....me liking it!
I think those are enough to profit, if ever I like something else is currency strength, to be at extreme, ready for retracement, thus support the divergence.

Good luck with your journal!