Is it possible to rely only on entering trades based on overbought and oversold and give good results?

Is it possible to rely only on entering trades based on overbought and oversold and give good results?

Check out this video and give it a backtest. This is for the MFI.

And yeah there are some guys using RSI scalping strategies to pass FTMO.

It depends what you are even using to determine if something is overbought or oversold …that is kind of subjective

My 2 cents.

Sure. Or. No!

It all really depends, on your system/strategy. Do you have one? Entry, exit? Position size, risk management, trade setup details? How soon do you go in, at what point do you get out, if you’re profitable or if the trade has moved against you?

I think you need some answers to those questions. And I think somebody has tested a strategy just like his, using RSI, but there were specific rules to follow. I’ll see if I can dig it up.

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It is possible, but needs a confirmation strategy to follow. I use these positions as indicators that a trend could continue, which is just as likely. In other words, you cannot rely on anything in Forex, except that there will be winners and losers.

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@Yassine11

I think your very likely to end up catching a falling knife if you rely on this method only.

Oversold markets can get even more oversold, and overbought markets get even more over bought - that’s the definition of a trend.

I don’t like indicators but I suppose if you saw a divergence with price it would add an extra element of protection.

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I completely agree, sometimes assets get overinflated and what should be considered “overbought” keeps get inflated and over speculated on

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What is the appropriate time frame for relying on this strategy?

The 4h or daily or…?

It is possible. Let us suppose you see a market that is overbought on the daily time frame. Instead of just selling right off the bet, you might as well look at two lower time frames (say, H4 and H1). You need to see the same overbought situation on those time frames too. If any one of them says otherwise, you just wait for it to catch up.

With all the three TFs saying the same thing, you can take the trade with confidence. I didn’t say certainty

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Watch the video on the first post mate, it uses the MFI instead of the RSI. The strategy is in the video, test it out over x amount of trades and see what the results are.

This is a generalisation but relying on indicator signals will frequently get you into a move late and get you out of a move late. Sometimes they also get you out early, which is also not good. Indicators are good for confirming set-ups but not good at signalling entries.

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What is the appropriate time frame for this strategy in your opinion?

IMO, it’s a losing strategy without plenty of confirmation backup, including looking at what’s happening on lower time frames, and what’s happening in the market media.

Pro traders would also recommend beginners to trade the daily chart because it’s the most profitable long term. I suggest you experiment with it on a demo account before going live to see what’s the best set up for you.

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Combine three timeframes. Daily, H4 and H1. If the three are overbought at the same particular time, it is highly likely that the market will head down soon. Vice versa for oversold

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“Appropriate” is in the eye of beholder. Try 1, 4 and daily as mentioned. But in the end, got with what works. Sounds simple enough, but you really have to find the bits and pieces that work for you.

I didn’t get your point, paraphrase

Speaking inglish

I’m saying what is appropriate for me may not be appropriate for you when it comes to times frames. Try 1hr, 4 hr and daily. Go from there. You have to find what works for you.

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