An agressive trading strategy needs support

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.

Adding to losing positions is the express train to margin call.

No, do not get it wrong please.
I will do adding to my positions, and I am very confident it will return in my favour.

That is why I say it in bold Money Management is rule #1

I never had a problem with this strategy, on a 10K account and using 1% of account per trade. It depends on how much you risk.

Cheers mate

You can add some screenshots to make your strategy easy to understand...

Regards,

IIN

I will post chart examples shortly.

EURUSD daily chart (Taken from NF demo)
RSI 80. Two chances to get shorts

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.

How do you know this ?

Look at the Weekly EURJPY, it went up 4000 pips since aug 2005 in a straight line with just one small retracement, how could you survive this without pockets the size of an elephant.

2 trades respectively occured on Kiwi.. could take 2 swings
Chat attached. (the second signal had drawdawn, and eliminated with adding to position)

Hello Ahmed,
thanks for posting your method. Why not wait untill the RSI recrosses the 20/80 in the direction of your trade? Wouldn't you decrease you drawdown?
Regards,
Pluto2

There seems to be a surge of these systems that keep pouring money into losing trades. There are three or four current threads going now.

I wonder where this is coming from?

At least the infamous EUR/USD - USD/CHF "hedge" seems to have gone the way of the Edsel.

I do not understand your reply. What do you mean? It moved 4000 pips. But I talk about different theory (which is reaching 80 in RSI) did it move 4000 pips beyond a RSI reading of 80?

Hello,

This is a nice idea. I didn't try this, I just wait the 20/80 lines to be hit then enter. I found that 4HR is more risky though.

Every time there are big market moves you get a flood of systems which are retrofitted to the previous couple of weeks data, then the market does something completely different. I have back tested many systems on similar ideas (overbought/oversold) and they don't give you any edge at all.

It seems that people just offend any ideas around here.
Ok let me tell you that I made hundreds pips using this style, and I promise you to post charts here forever, whether the market is trending or ranging and in all market modes.

It does not depend on last weeks data only, It depends on years of data, and future data too, which I will prove to you day-by-day. So please do not make a false claim that it worked only past weeks that's why I posted the charts.

Thanks for your positive comments

May 2006 EURUSD daily.

I already said it in bold one downside is "fewer trades" No wonder. I am confused from your reply.