RSI is one of the most versatile forex indicator ever created. It can be used both to identify trend and the end of the correction for position timing. This forex strategy takes full advantage of RSI, employing it as trend identification, position signal, and filter. This scalping strategy also uses equal stop loss and take profit, making it relatively low risk strategy, able to withstand even the most unpredictable market conditions.
Average profit and loss is about 10 pips. In this random market situation strategy closed 10 trades of which 9 were profitable. Making us 80 pips, just like that !
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Used forex indicators
RSI (relative stregth index) 60 (thick red line)
RSI 18 (thick blue line) applied in first indicators data
RSI 2 (thin green line) applied in first indicators data
Standard 70 and 30 lines will be used.
We trade in 5 min charts using EURUSD or USDJPY pair.
Forex strategy rules:
Buy
RSI 18 (blue) trending above RSI 60 (red).
RSI 2 falls below 30 line. We wait for first subsequent bullish candle to close. We enter immediately on candle close. Placing stop loss below the low of the formation. At this price, we will exit the position manually with loss. Distance between the entry and our loss will be used as profit target (Take profit equals stop loss).
Sell
RSI 18 (blue) trending below RSI 60 (red).
RSI 2 rises above 70 line. We wait for first subsequent bearish candle to close. We enter immediately on candle close. Placing stop loss above the high of the formation. At this price, we will exit the position manually with loss. Distance between the entry and our loss will be used as profit target (Take profit equals stop loss).
Notes to the strategy: In five minutes timframe there is usually no time for hesitation. Avoid trading in volatile market, when price can move, or even gap rapidly. If market conditions allows it places the stop and target immediately after position entry if not, exit position manually on predefined price levels.
