RSI in automatic mode

The simplicity of a trading algorithm does not always harm it, it so happens that a simple approach works and brings profit for years. It is to this category of robots that RSI Trade belongs, trading is carried out according to the standard RSI without additional filters, but this does not prevent the EA from earning. The robot is simple, but there are a couple of pitfalls that you need to be aware of before you can bet on it.

How RSI Trade works

To conclude a deal, only 1 condition needs to be met – the RSI line should begin to reverse in the overbought or oversold zone. At the close of the corresponding candle, RSI Trade opens a deal and then there are 3 possible scenarios:

  1. work with a fixed take and stop;
  2. trading using a martingale, in theory, helps to quickly get out of a drawdown if the stop is triggered;
  3. trailing stop – fixed TP and SL are not used; instead, the stop is moved following the price in a certain step.

 

The robot’s efficiency directly depends not only on the RSI period, but also on the take-to-stop ratio. I recommend setting the TP 5-6 times higher than the stop loss. Even after a series of 5-6 unsuccessful trades, the robot will come out of the drawdown due to just one successful take.

RSI Trade is not suitable for trending currency pairs. Let me remind you that during a trend, any oscillator generates a lot of false signals, the EA will steadily drain the deposit during this period. The developer did not provide protection against a suddenly started trend. If you will include RSI Trade in your portfolio, think about how to balance it with EAs with different logic. This robot trades in a flat, which means that you will need trend instruments with an average trading frequency.

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RSI Trade setup

RSI Trade setup

Since the advisor’s algorithm is simple, most of the settings concern position tracking:

  • RSI_Period – RSI period;
  • RSI_Price – at what price the RSI is calculated, set in numbers;
  • RSI_Hi_Level, RSI_Lo_Level – the position of the borders of the overbought and oversold zones;
  • TP, SL – take profit and stop loss in points;
  • Martin Flag – activation of the Martingale trading mode;
  • Init_lot – starting lot when trading with martingale;
  • Koef – coefficient of lot increase in a series of losing trades;
  • Trailing_flag – activation of the trawl mode;
  • Trailing_Stop – at what distance the stop follows the price;
  • Trailing_Step – with what step the stop moves behind the chart;
  • Magic Number – with this number RSI Trade marks its orders to distinguish them from others;
  • lot – what lot is being traded with.

 

If you experiment with optimization, then look for a profitable set of settings by changing the RSI period and the stop / take ratio. Consider the bit depth of quotes. The EA is unable to adjust take profit, stop loss and other parameters related to the distance in points.

Test results

Since the advisor trades quite rarely, the period from the beginning of 2018 to the end of March 2020 was chosen for the test.The following results were obtained:

  • fixed take and stop gave a 51.27% increase in the deposit with a 35.83% drawdown. Testing was carried out without preliminary optimization;
  • if you activate the trading mode with martingale (lot increase factor of 1.6), then with the same settings, the deposit will be lost. This is due to the fact that a too short stop is used and the load on the deposit is greatly increased on a series of 4-6 losses in a row;
  • activation of a trailing stop slightly improves the result. Earnings for the same period grows to 62.13%, while the drawdown decreases to 31.59%.

The EA also works in the majors, but with long periods of stagnation. So, for EURUSD, the main part of the profit was formed in 3-4 months of trading, the remaining 20 months were traded with zero effect.

The main conclusion on RSI Trade is that the EA works and can be profitable. Now about the nuances:

  • for each pair, you will have to select the settings, at least 1-2 times a year to optimize them. There is no universal set;
  • all 3 modes of operation are viable. Martingale gives the maximum profit, but the drawdown grows in this mode;
  • the advisor trades very slowly, it is not suitable for overclocking a deposit.

Otherwise, despite the somewhat primitive logic of the market analysis, RSI Trade looks good.