Hello guys
I am going to talk about an agressive trading strategy, most likely trading against the main trend in Overbought or Oversold[/b[ levels.
Short story, I need to use one indicator for this strategy
Relative Strength Index default
and adjust the overbought/oversold levels from 70-30 to 80-20
How are we going to enter the trade?
In an uptrend, we wait RSI to touch 80, and we initiate a short position.
In a downtrend, we wait RSI to touch 20, and we initiate a long position.
Timeframe 4hr / daily / weekly
I noticed that less than 4hr may fail.
What If prices (in come cases) continue to rise above 80 or drop below 20?
We add to our position simply. either by doubling trade size or by adding an equal position. It depends on the trader and his money management.
Down sides of this strategy, although I always made profit using it. Cause I enter first with a micro lot then increase it if needed. And when it goes in profit, I take profit according to pct of ATR.
1. Big drawdawn: it might occur. Yes, you might see big drawdawn in a very strong trend. But stay assured that a corrective move will follow.
2. Fewer trades: this does not happen every day, trades will be less than usual trading strategies, but trades will make pips at the same time.
3. Never know when to take profit: this needs a good market feeling, or a helper indicator. you may introduce your ideas
4. Time wasting: Because you need to take these opportunities, you have to watch all currencies in the timeframes. Which is big time wasting.
An ideal solution would be creating an all-in-one indicator for RSI that shows the real RSI values for all currencies in the 3 timeframes. this way we only keep looking at one page.
I know many will disagree with me about this strategy, and that it is against the trend. But I have never seen the market violating RSI certain levels.
Please note that RSI is different from one broker to another. I am going to show examples in future posts.. and examples about big drawdawns and how to solve them.
For now, If you can create this indicator, and you think it's worth the time please do it.
I am going to talk about an agressive trading strategy, most likely trading against the main trend in Overbought or Oversold[/b[ levels.
Short story, I need to use one indicator for this strategy
Relative Strength Index default
and adjust the overbought/oversold levels from 70-30 to 80-20
How are we going to enter the trade?
In an uptrend, we wait RSI to touch 80, and we initiate a short position.
In a downtrend, we wait RSI to touch 20, and we initiate a long position.
Timeframe 4hr / daily / weekly
I noticed that less than 4hr may fail.
What If prices (in come cases) continue to rise above 80 or drop below 20?
We add to our position simply. either by doubling trade size or by adding an equal position. It depends on the trader and his money management.
Down sides of this strategy, although I always made profit using it. Cause I enter first with a micro lot then increase it if needed. And when it goes in profit, I take profit according to pct of ATR.
1. Big drawdawn: it might occur. Yes, you might see big drawdawn in a very strong trend. But stay assured that a corrective move will follow.
2. Fewer trades: this does not happen every day, trades will be less than usual trading strategies, but trades will make pips at the same time.
3. Never know when to take profit: this needs a good market feeling, or a helper indicator. you may introduce your ideas
4. Time wasting: Because you need to take these opportunities, you have to watch all currencies in the timeframes. Which is big time wasting.
An ideal solution would be creating an all-in-one indicator for RSI that shows the real RSI values for all currencies in the 3 timeframes. this way we only keep looking at one page.
I know many will disagree with me about this strategy, and that it is against the trend. But I have never seen the market violating RSI certain levels.
Please note that RSI is different from one broker to another. I am going to show examples in future posts.. and examples about big drawdawns and how to solve them.
For now, If you can create this indicator, and you think it's worth the time please do it.
Forex is not easy!