This Strategy trades using the 5 Minute chart for instrument EUR/USD.
It is a scalper that looks for high probability short-term trades, with a small Takeprofit (5 pips) and a large Stoploss (40 pips).
Version 1 of this Strategy is very simple: it gets the RSI(14) and checks if it is over-bought (i.e. exceeds 70) or is over-sold (i.e. below 30).
If over-bought we expect the price to retrace, so we SELL, and if over-sold we BUY.
Trading is restricted to GMT 1000 start, 1600 finish.
%Equity to Risk is set to 80 for the Strategy Contest, and Amount to trade is calculated using this (refer to my previous Blog).
In the event of a Loss greater than 25% of the starting Equity, it attempts to recover by increasing the Takeprofit by a factor of 3 (not a great idea, but its only a Contest account !!).
Version 2 attempts to make this Strategy much more robust & efficient, especially during periods of high volatility, where the RSI might stay at extreme levels for an extended time.
During these periods, back-testing suggests it is much safer to stay on-trend, rather than wait for the inevitable retracement (and risk hitting our Stoploss.)
This is achieved this by:
1. the RSI signals are superseded if the last Bar Size exceeds 25 pips
2. added checking if the T3(20,0.7) slope is becoming extreme
3. checking for some specific Candle patterns, especially very long Top or Bottom wicks
In some of these cases where high volatility is detected, the Strategy will trade the trend once and then quit looking for any more trade signals that day. Version 2 also removes any attempt to recover losses by increasing the Takeprofit.
Additionally, version 2 fine-tunes some parameters like the RSI upper & lower levels, and the start / finish trading hours.
Further areas being researched for additional Signals (maybe for next month's Contest Strategy) include looking for changes in the HT_TRENDLINE from bearish to bullish (and vice versa) which are confirmed by TRIX(30) slope, with larger Takeprofit, as per the 2 short trades below:
It is a scalper that looks for high probability short-term trades, with a small Takeprofit (5 pips) and a large Stoploss (40 pips).
Version 1 of this Strategy is very simple: it gets the RSI(14) and checks if it is over-bought (i.e. exceeds 70) or is over-sold (i.e. below 30).
If over-bought we expect the price to retrace, so we SELL, and if over-sold we BUY.
Trading is restricted to GMT 1000 start, 1600 finish.
%Equity to Risk is set to 80 for the Strategy Contest, and Amount to trade is calculated using this (refer to my previous Blog).
In the event of a Loss greater than 25% of the starting Equity, it attempts to recover by increasing the Takeprofit by a factor of 3 (not a great idea, but its only a Contest account !!).
Version 2 attempts to make this Strategy much more robust & efficient, especially during periods of high volatility, where the RSI might stay at extreme levels for an extended time.
During these periods, back-testing suggests it is much safer to stay on-trend, rather than wait for the inevitable retracement (and risk hitting our Stoploss.)
This is achieved this by:
1. the RSI signals are superseded if the last Bar Size exceeds 25 pips
2. added checking if the T3(20,0.7) slope is becoming extreme
3. checking for some specific Candle patterns, especially very long Top or Bottom wicks
In some of these cases where high volatility is detected, the Strategy will trade the trend once and then quit looking for any more trade signals that day. Version 2 also removes any attempt to recover losses by increasing the Takeprofit.
Additionally, version 2 fine-tunes some parameters like the RSI upper & lower levels, and the start / finish trading hours.
Further areas being researched for additional Signals (maybe for next month's Contest Strategy) include looking for changes in the HT_TRENDLINE from bearish to bullish (and vice versa) which are confirmed by TRIX(30) slope, with larger Takeprofit, as per the 2 short trades below:
