Figure 1.1. Account equity trend comparison.
The RST Way is a cheat code for trading. Instead of hemorrhaging money with uncontrolled trading that ends in swift bankruptcy, you can start at breakeven with completely random trading using the secret of The RST Way, which I call “binomial process trading” (BPT). With more than 99%[1] of day traders losing money, The RST Way instantly propels you to the top 1% of traders.
Can you name another activity that has a cheat code like this? Where changing one component suddenly makes you better than 99% of people doing it? This is not hyperbole- it’s basic mathematics and share size automation, which transform trading from a wild roller-coaster ride into predictable and controlled binomial process trading.
Binomial process trading is a unique approach to risk management using a fixed risk/reward ratio and fixed win/loss amounts. These controls transform trading into a binomial process where a win is a win and a loss is a loss, similar to flipping a coin or rolling a die. This protects traders from wild equity swings, Gambler’s Ruin, Black Swan events, and every trader’s worst nightmare – one bad day wiping out weeks or months of gains.
Due to the fixed R/R ratio and win/loss amounts, the system breaks even over time if the trader does nothing but go long or short at random (minus commissions, fees, and the bid-ask spread).
With this breakeven system in place, the trader only needs a little market awareness and trading skill to nudge the win rate a few more points to cover commissions and fees and be profitable (Figure 1.1).
The book begins with a beginner’s guide to day trading and ends with the RST approach to risk management. The goal is to have a complete resource that anyone can pick up and learn everything they need to trade The RST Way. In addition to the theory and motivation, we’ll also cover how to execute it in DAS Trader and other trading platforms.
If you’re already an experienced trader and familiar with candlestick charts, double-sided auctions, and bid-ask spreads, then you may want to skip to Chapter 7, where we get into the specific risks faced by day traders and how The RST Way addresses them.
Unfortunately, learning to day trade from a book is like learning to play basketball from a book. The author can describe the rules, theory, and strategies in fantastic detail, but no one will be able to play basketball at a high level after reading it. The same is true for day trading. No words can fully describe what a trader is doing during live trading.
To solve this, a companion online course has been created at LearnToDayTrade.com. This is the most immersive and thorough way to learn The RST Way of trading. Because the course is much easier to update than the book, it will also have the most up-to-date information. However, you do not need to take the course to learn The RST Way. This book contains 100% of the theory and implementation. However, if you prefer to learn through a video course and receive direct mentorship from me, it’s available to you. I hope you enjoy learning The RST Way of trading. If you have any questions or feedback, please visit RocketScienceTrading.com to reach me by email, Discord, or 𝕏. You should also visit RocketScienceTrading.com/book, where you will find the tools and resources mentioned in the book. Finally, I highly encourage you to join the RST Discord server (invite link is on the website) so we can explore The RST Way together.
[1]Barber, Brad M., et al. “The cross-section of speculator skill: Evidence from day trading.” Journal of Financial Markets 18 (2014): 1-24.