The standard look back period is 14 and by using 5 days, we will be able to take advantage of increased momentum sooner. This is the third article in our RSI series. Values below 5 are green. The accumulated strategy worked as intended.
Bollinger Bands Trading
Note that I also prefer to see a slope in the moving average. The standard look back period is 14 and by using 5 days, we will be able to take advantage of increased momentum sooner. The purpose of the RSI in this trading strategy is to confirm the strength of the trend: Note that we will not be using bullish divergence, bearish divergence or the overbought and oversold levels.
We are going to keep this trading strategy simple. The chart below will walk through the 5 steps that follow. Another option would be to exit with whatever profit you have when the opposite trading signal is given.
Like many robust trading strategies, you can use this strategy for taking long and short trades. Here is how to setup and manage a buying opportunity when the buy trading signal appears:.
Buy using reversal candlestick patterns and price action that form when the price touches the 20 SMA line. Look for reversal candlesticks like:. To explain oversold and overbought: If the momentum in price movement is increasing to the upside, an over extension will lead the oscillator into the overbought zone, generally the 70 level.
At this point as well, counter trend traders will look to short the market. If price momentum is to the downside, the RSI can reach the 30 level and at this point, theoretically, traders will see a market that is oversold and sellers will look to take profits. We can use structure to determine the trend but for a quick and dirty trend determination, we are going to use the moving average in two ways: If price movement is cutting back and forth through the moving average, we will consider that to be a range bound market.
If there are gaps between the moving average and price, and price is predominately on one side of the average, we will consider that to be trending.
Moving average can highlight trends and consolidation. RSI Trading System v. As a result we get widely customizable EA. According to our users feedbacks and requests about the older version this one gets all the possible settings. Now you can fully adjust RSI trading levels. There is two main possible trading styles: New great more informative info display; New bugs and lags free source code core, faster for testing; 2 different trading styles Center mode or High, Low mode ; EA featured with full settings and reverse system; Customizable lot size management.
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