The Riptide Framework (Pt. 1)

Today’s post will introduce and cover some of the core principles of the Riptide Framework.

This framework has been an amalgamation of our collective experience here at Riptide, with my own indicators applied to give you the highest probable trades. The framework uses a couple of basic rules, already covered here in some bits and pieces, but this post will attempt to put that in a simple digestible format.

To kick off the Riptide Framework has 4 basic rules that govern the way we trade:


Rule 1 – Always Take Profit

Basic, but you won’t believe how many traders do not follow through on this, or blindly hope that the price will come back once a trade starts falling. The Riptide Framework makes one thing clear. We respect our profit targets regardless of what happens. Price keeps moving? Great. We simply couldn’t predict without gambling our money that price would continue (technically we can but more on this later).

Always take 1% as your first target and 2% as your second.

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Rule 2 – Use a stop loss

Again pretty basic. But so many traders simply fail to keep their stop loss or move it throughout the trade. DO NOT MOVE YOUR SL – unless you are in profit and trailing up!

Speaking of trailing your SL a great way to do this, would be to move your SL to the second last lowest low for example.

This allows you to avoid getting wicked out as well as place your stop in a place that if you did gets stopped out, theres a high probabliity that trend has indeed changed and you should exit the trade.


Rule 3 – Stay on the damn road!

Ahh this is a good favourite of mine. Let’s start with the analogy the title implies. How many of you when your driving, follow the signs and stay on the road. Yeah I’m pretty sure most of you do.

So why when the road is going left would you turn right? You wouldn’t correct? This is exactly what so many retail traders do every single day. The market is headed down, you can see a clear trend, and yet they decide to trade against the market. Yes that’s right, buying into a sell of is like turning your car right when the road is heading left. Sometimes, were lucky and we maybe just maybe time the bottom, but eventually you’ll drive off a cliff.

So don’t be the smartest trader in the room. Be the most profitable, by riding the shoulders of giants. Let them battle it out and just pick up the pieces they leave behind.


Rule 4 – Don’t Trade Blind

This last rule is possibly the hardest rule of all to get right. Far too often I see traders trade blind. What do I mean? They attempt to react to price which of course fluctuates. Prices will move up and they will move down. Its not rocket science, but flip flopping will destroy your position.

As a trader we have to set targets. Both profit and loss touched on earlier in the post, but in reality we need to know exactly when a trade is no longer valid or when to get out when uncertainty presents itself. Now the irony of this that 95% of the technical indicators in the market set you up for failure here? Why? Because they simply show you what price has already done, not what it can do or when we are truly in oversold or overbought territory. Some smart traders can use the indicators to attempt to find divergences, but on lower time frames you may as well be rolling the dice.

A simple example using the RSI without any filter, however when do you stop filtering?

I generally live by the rule that if you can explain to me mathematically why a concept or indicator will be right today and tomorrow, then I think that is a great indicator. The problem is most traders don’t even know, let alone understand the math behind how some indicators are calculated.

All I want you to take away from the example above is that knowing where price can move and when its more likely to reverse, places you above 90% of the market. You are reducing your risk and not attempting to make pennies on the dollar. It can be argued that if you took profit on some of the RSI calls you’d be winning, and I agree but you are simply not stacking the odds of winning in your favor.

If you haven’t found your framework, or still struggling to see above market volatility, take a peek at some of our indicators below.

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