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Forex trading strategy #4 (RSI High-Low)

Although no trading system can solely rely on RSI indicator, using it in combination with other tools and proper technical analysis can bring a new edge to your Forex trading.

Setup:
Currency pair: Any.
Time frame: Any.
Indicator: RSI (14) with levels at 70 and 30.

Entry rules: Buy when RSI has crossed below 30, formed a bottom, and then crossed back up through 30.
Entry rules: Sell when RSI has crossed above 70, formed a peak, and then crossed back down through 70.

Exit rules: not set.

FOREX TRADING SYSTEM


Advantages: RSI is a very good indicator to refer for confirmation for any entry in any simple or complex trading system. For current trading method it advices well on entries, but opportunities occur not that often.
Disadvantages: monitoring is needed, still false signals take place. Strategy is suggested to be used in combination with other ones.



http://forex-strategies-revealed.com/


just try this with RSI(7) but with GBP/USD and use 5 min chart set +10 TP and you simple will make 100 pip per day wow .:P

Great comment and nice results!
Thank you.

Happy trading!
Edward.

Hi Edward,
How many pips do you think the stop loss should be?

I would use wide stop: around 50 pips and keep watching RSI, which if happen to move in oversold/bought zone short after the entry, would suggest immediate exit.

In such cases we don't wait for the stop to be hit, we exit immediately on the close of a signaling candle.
(Actually here we never want to be stopped out with 50 pips loss; 50 pips is rather a catastrophic stop during aggressive/unpredictable market conditions).

Regards,
Edward.

Hi Edward,
I'm new to the site and fairly new to the forex. I've recently become a single mother of 4 who is trying to learn as quickly as I can, but I've hit a few roadblocks. I've been using the RSI(7) on the 5 minute chart and got phenomenal results last week. This week has been a little different. Can you tell me of any other indicator that works well with this one that can help weed out the fake signals? Any info would definitely be appreciated.

Hi,
You may try combining RSI with Stochastic (5, 3, 3). Entry should be initiated on Stochastic lines cross and only if RSI has returned from overbought/oversold area. Not all Stochastic crosses are valid for entry though. Use only those that occur below 30 and above 70.

Regards,
Edward.

Hi Edward,
Thank you so much for your quick response and helpful information! Out of all the thousands of sites out there this is by far the best, keep up the good work! :)

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