Keltons New 40% Strategy

Trading Systems Free Forex Trading Systems
1

Hello forum, I was planning on keeping this strategy for my personal use but just like my thread [B][U]Statistical Arb/ Pairs Trading Strategy[/U][/B] I couldn’t keep this one quiet. And besides the Forex Market is to large to be manipulated anyway so I hope you all make billions off it. Also if you do not know… My name is Kelton I am 22 (as of yesterday ) I live in Norther VA and have a passion for the markets…

Now my strategy is pretty straight forward and you might have seen something similar even though its hard to
find info on the subject for some reason…

I use two indicators… ATR and RSI. Now the ATR shows you the average true range of price movement for a specified amount of bars. The RSI indicates overbought and oversold areas.

We will use the RSI (21) for our buy signals and exits and the ATR (21) for our actual entries and our stop loss.

The ATR helps us avoid whipsaws in the market and having trades go immediately against you.

The RSI has specific levels that we will pay attention to. the 30, 40, 50, 60, and 70 levels.

When the RSI crosses over the 50 level we will be looking for a long entry. Once it goes over the 50 we look at the ATR and see where we will place our Buy Stop and our STOP LOSS. You will place your BUY STOP at 40% over the current ATR above the close of the candle that broke the 50 level. And you Stop loss at 40% of the ATR below the open of the candle that broke the 50 level. Once the trade has been placed and is in working order you will wait until the RSI crosses 60 and use the same stop loss method as before but just buy it at the close of the candle. Now once the RSI goes over 70 and then cross below 70 you will close your first order and then once the RSI goes below 60 again you will close the second order.

Now if you are going to do this buy going short in stead you will short at the crossing of 50 and second short at 40 level. Once the RSI crosses 30 and back above 30 you will close first short order and once above 40 you will close the second short order. Of course using the same Entry and stop loss strategy as if you were going long but opposite of course.

Here is a picture of what a current trade should look like before being entered. The green line is the SELL STOP and the RED is the STOP LOSS.
[B][I][U]
TIME FRAME - 1HR - 4HR WORKS THE BEST. ITS DIFFICULT ON LOWER TIME FRAMES BECAUSE OF NOISE[/U][/I][/B]

Please comment with any tips or concerns but it is a very solid strategy for FOREX and even better on stocks because of the low volatility of stocks.

Follow me on Instagram! investmentbrothers

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So in summary:

TF = H1, H4
RSI = 21, Close, Levels: 30,40,50,60 & 70
ATR = 21

Buy:

  1. RSI cross over 50.

  2. Buy Stop #1 = Price Close + 40% ATR.

  3. Stop Loss #1 = Price Open - 40% ATR.

  4. RSI cross over 60.

  5. Buy Stop #2 = Price Close + 40% ATR.

  6. Stop Loss #2 = Price Open - 40% ATR.

  7. RSI cross over 70 & goes below 70 = Close Buy #1.

  8. RSI goes below 60 = Close Buy #2

Sell:
The other way around with RSI level 50, 40 & 30 instead.

Am I following your isntruction right?

I’m just looking at a glance here, so a couple of questions:

  1. This strategy reguires to hold trades a couple of days? Looking at GU H1 RSI took 3-4 days to reach 70 level?

  2. Do you move your SL?

  3. Best currency pair?

  4. What if RSI goes above 50 but then a candle later went below? Do we close trade, open Sell Stop or let it hit SL.

  5. It seems RSI went up-down-up-down at 40, 50, 60 level (I’m just glancing through) so how do we manage that

  6. If we missed the first trade, do we enter 2nd trade (RSI 60, 40), or do we wait another RSI 50 cross?

Thanks

3

Hi Kelton, nice to see your new thread

May I ask you about what you consider a “cross”? Is it when the candle closes above the line that should be crossed? or when it just traded above it, without closing yet?

Thanks.

4

How long did you backtest for? And I echo the question about what pairs you tested. :slight_smile:

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m a confused newbie… pliz just exxplain one simple thing… suppose the candle closed at eurusd 1.2965 with current atr(21) value 0.0016. so if iam to buy at 40% over the current atr of the closed candle eurusd 1.2965, atr 0.0016. how the calculation is carried out… im not accustomed with ATR… PLIZ HELP