Improved RSI momentum forex strategy

Market Momentum provides a great entry opportunity. Especially so, if we decide to use trailing stop. The trading system that will be revealed in following paragraphs, uses four indicators to establish trend and momentum. It enters the trade aggressively, using multiple entry option with trailing stop applied on each trade. This results in steady and solid performance during our historicala data trial since 2003.

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These features combined are making the system works very well in all time frames above 30 min. It was tested on historical data with positive results.

 

Used tools and indicators

Exponential moving averages (EMAs 500,250). Slow and fast EMA are used to identify  a trend. We enter only with confluence with the trend. This will be our primary filter

 

RSI secondary filter (200). RSI with high calculation period is used as a combination of long term momentum and trend filter. We will also use the ability of RSI to filter out the range, by applying sell below 45, buy above 55 zone in the middle of indicators window.

 

RSI signal (RSI period 21). Immediate momentum signal. We wait for signal candle close to enter the trade.

Signal candle (1-150 pips)Confirmation of the momentum. Candle with defined min/max range closing in the direction of trend.

 

SAR parabolic (step 0,02, max 0,05) each entry must also be confirmed by SAR parabolic.

 

SAR parabolic trailing stop: After the entry we place trailing stop at last closed SAR dot + (extra deviation 80 pips). It is adjusted with each following sar dot, only in the direction of profitable trade. Trailing stop will remain the only method of how to close the trade.

 

MAX open trades (10 in test): Strategy can get aggressive by increasing the number of max open trade per side simultaneously. When increasing this input, adjust the lot size accordingly.

 

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Forex strategy rules

SELL

EMA slow trending above EMA fast. This confirms the downtrend. Only short trades are admitted.

RSI secondary (slow) trends below sell below zone.

RSI signal falls below 30 line.

 

Bearish candle closes with defined body range, closes below the SAR dot.

We enter the trade short on signal candle close, placing trailing stop at last closed SAR dot + extra distance.

 

BUY

EMA slow trending below EMA fast. This confirms the uptrend. Only long trades are admitted.

RSI secondary (slow) trends above buy above zone.

RSI signal rises above 70 line.

 

Bullish candle closes with defined body range, closes above the SAR dot.

We enter the trade long on signal candle close, placing trailing stop at last closed SAR dot - extra distance.

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For best results, use this forex strategy with one of our trusted forex brokers

(STP/ECN with MT4 bridge).

To win you must trade with broker on your side.

 

 

Disclaimer:  Expert advisor was tested for profitability on historical data. All screen shots provided are displaying real results of the test. However past data will never guarantee future success. Every expert advisor needs to be tested properly on demo account. LIVE use only on your own risk. Read full disclaimer. TheForexKings Team does not give any financial advice. TheForexKings does not take any responsibility for any user’s investments and investment decisions. All rights reserved. Strictly for personal use.

 

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“Trading FOREX since 2006. Full time trader and web developer since 2013. My two biggest hobbies are trading and web development. In TheForexKings I managed to connect both of them. Even after 12 years of trading I still have the same passion for the market as at the beginning. The aspect I enjoy the most : development and testing of new ideas.” 

 

Only in 2016 - 2017 we have created more than 400 forex strategies. During this period we have also developed and published +200 MT4 Expert advisors based on those strategies. We are dedicated to provide you with viable and complete trading systems that have thrived in extensive historical testing. We want to give you complete and transparent trading solutions, that once mastered ,will set you financially free. We want to give you a fighting and winning chance in the market. ” 

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