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Advanced system #3 (Neat entry: RSI + Full Stochastic)


Current strategy has won the hearts of many Forex traders. And why not when it has a great winning potential.

Strategy requirements/setup:
Time frame: daily
Currency pair: any
Trading setup: SMA 150,
RSI (3) with horizontal lines at 80 and 20,
Full Stochastic (6, 3, 3) with horizontal lines at 70 and 30.

Trading rules:


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You may try 100 EMA or 80 EMA or 55 EMA, see which one performs best for your chosen currency pairs.

Regards,
Edward

hi edward
thank you for this great site.
can you pls try this strategy and post your comment?

currency pair eu/usd
time frame D:1
leverage 1:15
rsi:7

buy only if rsi plunged under 30 (open with the new bar)
stop loss:500pip
take profit:100 pip

sell only if rsi plunged over 85 (open with the new bar)
stop loss :500 pip
take profit:100 pip

best regards

Hi,

The strategy may work in a ranging market, but would fail in a trending one.
When RSI plunges below 30 it indicates the beginning of a strong downtrend, although we like to consider the market being oversold at that point. Once RSI plunges below 30 the market can trend down for a long period of time easily making 500 pips and more... Thus, I'm afraid, the system is bound to fail, keeping in mind also high 5:1 risk/reward ratio.

Still, let me show you how you can enter with RSI effectively.

Entry with RSI

When RSI goes below 30, you make notes that market has entered an oversold area and mark a Swing low point.

Then you wait for a Failure swing low on RSI. Entry is done on the break, which I highlighted in green.

The signal is even stronger when Swing Low and Failure Swing Low show a divergence with chart prices.

Hope this helps,

Regards,
Edward

Dear Edward:

Well, first thanks. I have been live since late dec. and I have you to thank for my longevity. Neat entry is my fave and near exclusive, but now I have a few questions for you.

My problem is the 150 ema. Determining trend. Back in the good old days of the euro's run from 1.34 it was easy. When it got close to the 150 you entered your trade in the opposing direction. Bacically buy on the dips. BUT now I'm running into a lot of pairs that are ranging and/or have changed trend.(everything but EUR and AUD) What would you suggest to do for ranging pairs? I've done well with CAD, but I would rather have the advice of an expert than a few lucky trades on my side.

For everything (ranging or trending)I look at risk reward and support/ resistance and it if doesnt go, I don't. Strangely, I just picked up the 'Way of the Turtle' and it went on lots about money mgmt and edge (risk/reward) with a very simple trading strategy. They certainly never had SL of 500 and PT of 100, but for sure the other way around. They didnt look at a smaller time frame either.

I think that joeandjulian[at]yahoo.com. above has his head together. I am mulling those ideas too, so thanks to you both.

Grant,

You're right. In ranging market the method of identifying a trend with 150 SMA is vulnerable.
When the market starts ranging and catches you out with few negative trades, it is time to pause and look for general clues: add trend lines, define boundaries of the price range corridor, identify major support/resistance levels and abandon trading.. till new breakout, followed by a retest and, finally, failure - an invitation to return back to trading.

Some Forex traders like switching to alternative strategies suitable for range trading, where they try to catch/predict the next bounce off the established range boundaries. In my opinion, ranging strategies are good for small time frames, where risks are small as well. Playing in such way with daily charts can be quite expensive and most of the time won't justify the risks.

Best regards,
Edward

Hello All,
Try 5 min interval it goes best with this strategy.

Best Regards
Alexey

Hello Edward,

Could you highlight on what triggers are, deviation and scalping? I understand a little about scalping as it has to do with opening several positions with tight SL and TP. I hope nothing more is added. If so, pls through some light.

Cyril

Hi Cyril,

Nothing more has been added.
Happy trading!

Edward