RMI (Relative Momentum Indicator)
for FOREX, stocks, commodities & Crypto

About Securities Trading

Fundamentals of securities trading:

Price oscillates up and down – while trending in direction.

Oscillations tend to occur between levels of support and resistance.

Oscillations and trends may differ with selected viewing time frame.

Successful trading involves:

Selecting a potential oscillation with sufficient risk/reward potential.

Entering trade early enough in the oscillation to improve the opportunities for profit.

Taking profit as oscillation matures – or exiting if oscillation reverses.

In addition to the above, I personally seek:

A reward vs risk potential of at least three.

A profit vs loss ratio greater than fifty percent. Trading can be profitable with a fifty percent win ratio, but gain increases significantly when this ratio is higher. My personal goal is seventy-five percent or greater.

I use the RMI as my primary indicator to achieve my 75% goal.

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Using the RMI (Relative Momentum Indicator)

Example of usage:  FOREX trade Friday 10/6/2020

At midday on Friday, I entered a long trade because the RMI (blue and yellow oscillations) indicated that a bullish move would take place. Unfortunately, the market reversed itself unexpectedly and I found myself down. I watched and waited for the downward movement to end but market closing time was near. As a general rule, I prefer not to hold a position open over the weekend. But I hate taking an unnecessary loss, so I had a tough decision to make.

The RMI came to my rescue!

Just before the market was due to close, I noted a reversal in the RMI that indicated a significant move upward could happen soon. I chose to hold my position with my stop/loss adjusted for potentially more volatility.

The following Monday morning, I closed my trade for a nice profit (green vertical line on the chart).

The RMI was the ONLY indicator to suggest this bullish move. I turned a small loss into a handsome profit of about ten times what I would have lost had I exited on Friday.

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More Uising the RMI

EURUSD 11-11-2020

Price has penetrated and reversed to above resistance at 1.17608

RMI indicates possible bullish up move. to next resistance near 1.1800

Distance between lines of support and resistance indicates possible 350+ tick up move.

I prefer trades offering a reward with a minimum of three times risk.

Enter long at 1.17650 – set stoploss at 1.17600.

At 3:15 PM, I took a profit at 1.17810 for a gain of 160 pips. The RMI still looked moderately bullish; but I decided not to risk holding my position into the overnight session. A profit of three times risk should not be taken overnight in current market conditions

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More notes on interpreting the RMI

Chart of USDJPY – 3000 ticks per bar – white bars are the first bar of the day.

Note that closing price oscillations usually correspond with the horizontal lines. I add these lines to the chart a week, or two, BEFORE using the chart.

We call this, “seeing the music of the market.”

Note how RMI oscillators (Cyan and Yellow lines) are above price in uptrends and below the price downtrends.

We use other technical indicators, but we emphasize the RMI’s position relative to price and the two RMI oscillators’ juxtaposition to each other before making any trading decision.

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The RMI might just be the last and most effective trading tool you will ever have to buy.

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