What Type of Trading Strategy is This?
This is a commonly used trading system that has been automated, it helps identify trend changes and can be used with the right settings as a trading robot, it has risk management included helping you reduce your losses. We are not promising you will get rich, but this robot can be used fully or semi-automated as part of a collection of other trading robots together.
What is a Relative Strength Indicator (RSI) Indicator?
The RSI measures the ratio of up-moves to down-moves and normalises the calculation so that the index is expressed in a range of 0-100. It has been originally developed by J.Welles Wilder. If the RSI is 70 or greater, the instrument is assumed to be overbought (a situation in which prices have risen more than market expectations). An RSI of 30 or less is taken as a signal that the instrument may be oversold (a situation in which prices have fallen more than the market expectations). Contrary to many opinions, the RSI is a leading indicator.
How is it Calculated?
The formula for FX RSI indicator takes two equations that are involved in solving the formula. The first component equation obtains the initial Relative Strength (RS) value, which is the ratio of the average UP closes to the average DOWN closes over 'N' periods represented by the following formula:
RS = Average of 'N' day's closing UP/Average of 'N' days closes DOWN
The actual RSI value is calculated by indexing the indicator to 100 through the use of the following formula: RSI = 100 - (100 /1 + RS).
~ Only a single buy or sell position will be open at any time ~
EXAMPLE SETTINGS FOR EURUSD
How Do We Capture a Trend?
- If the RSI moves above a threshold like 70 it is considered overbought and the price may drop
- If the RSI moves below a threshold like 30 it is considered oversold and the price may rise
- The 50 level is the midline that separates the upper (Bullish) and lower (Bearish) territories.
- In an uptrend, the RSI is usually above 50, while in a downtrend, it is below 50.
How Does This Trading Robot Work?
The core of the trading robot uses the classic RSI trading system where positions are opened when the RSI line breaks above or below upper and lower thresholds, additional logic has been added to improve performance and reduce false signals. Closing positions are very important and there are various optional methods a trader can use.
- Stop loss, Take profit and Trailing stop loss
- Close on the reverse, this is very useful as it will keep a position open until the opposite signal occurs
This useful feature will allow you to set the start and end trading times, so you can avoid the most volatile periods, the optimum trading hours will differ for each instrument, but can easily be found using cAlgo's optimization feature.
Instant Window Popup and Email Alerts
You can also show a pop-up window and have an email sent to you when a price reversal signal happens.
- Symbol: EURUSD
- Timeframe: Hour
- Time: 12:34
- Price: 1.2295
- RSI value: 38
- RSI period: 14
- Trade direction: Buy
Option to Turn off Auto-Trading
With Auto-Trading turned off you can use this system as a signal generator to receive an email or a pop-up window.
This Strategy Will Work on All Symbols
We ran a back-test on EURUSD and without any optimization and basic settings.
~ Basic Backtest Results ~
Starting Capital: £1000.00
Date Range: 1 year
Profit: £367.00 (+37%)
Drawdown: 21.78% - using a £5000.00 capital the DD is 5.91%
Starting Capital: £5000.00
Date Range: 7 year's (complete date range)
Profit: £5241.00 (+105%)
~ We will include the EURUSD settings with the robot ~
PLEASE NOTE THESE BACK TESTS ARE WITH SIMPLE SETTINGS FOR ONE CURRENCY PAIR.
YOU WILL NEED TO FIND THE BEST SETTINGS FOR OTHER SYMBOLS
Learn How To Backtest & Optimise Your Parameters
Click on the button above to download your 14-day free trial
Adjustable Settings & Features
We have made sure that you are not just buying strategy that just opens and closes positions when the RSI is oversold or overbought, we have included the most useful risk management and alert features that you will need to get the most out of this robot.
Not Using the cTrader Trading Platform?
If you are not using the cTrader platform, you can find out more about it by clicking on the link below.
Tell Me More About the cTrader Trading Platform
Do You Want To Add Additional Features?
If you want to add more indicators or additional features to this robot then you would need to purchase the source code so that you own the project 100%
~ source code not included for the price stated above ~
The robot is delivered to you without source code for the price stated above, but if you wish to own and have the full source code so you can modify the robot yourself than we can sell you this robot for £99.99, if you have already purchased the robot then we will deduct the price you paid from the total price.
Watch a Video Demonstration
The video has been uploaded to 1080p High Quality, so do not forget to set your U-Tube video quality to 1080p HD.
Duration: 14 minutes