RSIMACD_KKC strategy is based on the opening trades using RSI(14) and
MACD(12 26 9) momentum indicators and the Historical Candle. The
strategy works for both side trades opening. I use 1H period for both
RSI(14) and MACD(12 26 9) indicators as well as for Historical
Candle.
First of all the strategy evaluates number of open positions. When
open positions amount is zero the strategy evaluates two momentum
indicators, i. e. 1H RSI(14) and 1H MACD(12 26 9) and at the same
time
it waits for Historical Candle opening and closing. The indicators
work as follows: if the RSI is turning down below 50, it means that
the losses are greater than the gains, and at the same time the MACD
line is below the MACDSignal (MACD signal line) showing that downside
momentum is increasing, a sell position is being opened. However,
when
the RSI is above 50, it means that the gains are greater than the
losses and the MACD line is above the MACDSignal, which signals
upward
momentum, a buy position is being opened. Signal line crossovers
provide evidence that the trend in the stock is about to accelerate
in
the direction of the crossover but we need a confirmation of the
momentum as well. That’s why we are using the RSI indicator. In
this
case, the centre line for the RSI is 50, which is seen as both the
support and resistance line for the indicator. When a market
volatility is quite high sometimes we have to wait for the
stabilization in case to avoid some big losses. That’s why my
strategy works in 1H time frame, it helps to define the optimal
number
of trades in a volatile market. I use EUR/USD pair just because I am
watching it for a quite long time, so in comparison with other
currency pairs the movement of EUR/USD is better known for me. More
over the EUR/USD volatility is not too high and it significantly
decreases the risk of big losses. The SL has been set at 300 pips, in
my opinion it’s the optimal figure taking into account the recent
volatile market. The low settings of SL in such a situation could
lead
to often and significant losses. The TP has been set at 5 pips, it
was
configured by my personal experience I gained working with EUR/USD.
Trade volume has been set at 5 lots in case to generate the
significant profit at the end of the contest if the strategy would
succeed.