For the past week I have been using a pretty simple scalping strategy which so far has been successful. I use the 1 min and 5 min time frames and the only indicator I use is RSI periods 3, levels 90 (overbought) and 10 (oversold). I would also look for S/R levels and observe price action and the shape of closing candlesticks. I trade only the quiet hours for this strategy 7pm-1am eastern and 1pm-5pm eastern. So what I basicaly do is wait untill RSI hits the 90 level and place a sell order or buy at the 10 level. I exit the trade when RSI hits the 50 level. Of course there is a lot of feel of whether to enter a trade at these levels or not because sometimes it might go beyond them but for the most part it would reverse. For example if I see RSI to hit the 90 level but i see a strong bullish trend with long candlesticks or an S/R level which would be beyond the 90 level of RSI, I would wait untill it hits the S/R and then go short.
I have been using this strategy only for a week with about 30 trades made and I have about 70% success. It’s still in the testing stage and I have no idea if it will continue to give me those results or if it has just been a lucky week. Tell me guys what you think about it and try if for yourself if you are interested and share your results so we can determine if it is a good strategy or not.
As for the template do you want to see how I have set up my charts or an actual trade?
I trade EUR/USD, EUR/GBP, USD/JPY and AUD/USD with Oanda because of the lower spread. This system won’t work at all with spreads greater than 2 pips. Even a spread above 1.5 can be hard to trade.
More like spread less than 1.5 pips. My TP is the level 50 of RSI which is usually 1-5 pips depending on the price movement. I just put a max SL at 6 pips today, but I usually exit if price moves in the opposite direction of my order where RSI would go beyond 90/10. Then I would just wait till RSI comes to 50 to take a loss of usually not more than -2 pips or I might break even or get a 0.1 pips profit. If the price doesn’t move in my direction before it reaches -6 pips I would take the -6 pips loss because I got burned for 14 pips last night. That was also the first day when I had a total loss from trading this way. I might reduce SL even more if I see hitting 6 pips quite a lot since my profit is usually much less than that but the way to make profit this way is to have more successful trades than losing ones.
This is a really interesting system. I’m going to be playing around with this for sure. =)
I know the general idea of the RSI Indicator, but am still a little unclear about the technicalities of it, I will be sure to read up on this as soon as I get the chance.
The RSI period that the OP suggests (3) is way to short for the volatile crypto’s. It was also a setting from over 7 years ago when markets were not as volatile as they are now. The trade logic appears to be sound…
Generally if you use a short RSI period you can widen the RSI overbought and oversold values ie: 90 - 10.
I would start by trying to smooth the RSI with a longer period and settle the indicator down so you can make some sense of the signals.
You have to trade it (start on a demo) the way that is easiest for you…
Maybe start with periods 14 - 25, maybe even all the way up to 35. What ever enables you to see a pattern in the indicator.
Chart below (1 hour - Bitcoin) RSI 3 on the top and RSI 14 on the bottom.
