Hi guys,
I need your help with a strategy,
I have been back testing a RSI divergence strategy(Intra-day) I came up with last week.
The indicators followed are as below,
RSI (14)
ATR (5)
STOCHASTICS (5,3,3)
TIME FRAME 15M/5M
Trading Hours 13:00 to 21:00
Step 1: Identify a RSI divergence either bullish or bearish. Preferably with the previous highs and lows of the same day.
Step 2: Wait for a Stochastic crosssover for the bullish or bearish reversal.
STEP 3 After crossover has happended use ATR(5) fir setting target and stoploss
3.1 TARGET= 3XATR (only one fixed target)
3.2 STOPLOSS = 1.5XATR (fixed, no trailing)
3.3 Risk to Reward will always be 2:1
Here RSI is used to identify areas where price is not in sync with RSI, indicating a very high chance for reversal. Secondly the reversal is confirmed from the stochastic. Targets and stops are set using ATR, so that we take into consider the volatility of crude, we know that crude is notorious for being too volatile. So rather than having a fix point stoploss and target for every trade, w use ATR to set them according to the movement of the day.
I tested this strategy using an excel sheet (it makes it easier to determine targets and stops (once you feed the formulas)
Out of 20 trades taken 10 were profitable other 10 were losses. But as you might have guessed because the risk to reward ratio is in my favor, it was overall a profitable situation.
For testing the strategy I assumed that according to the stoploss for every trade I will risk a maximum of Rs 250 for every trade. That roughly turns out to be 2-3 mini lots per trade. I have also assumed that the cost f brokerage plus taxes is Rs. 50 (20 per order plus rs 10 as taxes and duty).
Guys can you help me fine tune this strategy? Any suggestions? Ant changes in indicator or indicator periods?
All inputs are appreciated.
Thanks in Advance.
I'll attach screenshot of the excel for the past two days (5minute).
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