RSI Scalping

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.

1 Like

Wow, 70% is amazing.

Well done.

Any chance of a template?

May I ask what currency pairs you are trading with this system?


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.

Oh I see, if this system only works for spreads of 1.5 and 2, what would be your average TP? and Stop Losses?

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.

Thank you,

Lol, I set default stop loss on oanda to -5 and it closed me out at -10.

Can i use this strategy for cryptocurrency trading?

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.