Simple RSI Forex Trading Strategy

The Simple RSI Forex Trading Strategy is based on only one indicator, the RSI or Relative Strength Index Indicator.

This is the crudest form of trading with the RSI indicator because you are not going to use any other indicator at all.

Timeframes: Any

Currency Pairs: Any

Indicators: RSI only

Refer to this chart below for the buying and selling rules which I will explain below:

Simple RSI Forex Trading Strategy

Buying Rules

  1. RSI indicator must be in the oversold region, which is below level 30.
  2. When RSI indicator crosses from the lower 30 level to the upper, this is your buy signal.
  3. Wait for a bullish candlestick to confirm a buy signal and when it happens, place a buy stop order at least 2 pips above the high of that bullish candlestick.
  4. place your stop loss 2-5 pips below the low of that bullish candlestick but if you see that it may be too close to the entry price, then place it a bit far away so that you do not get stopped out prematurely and one way to do this is to look for the nearest swing low and place yours stop loss a few pips above it.
  5. For take profit target, you can use the previous swing high or aim for a risk:reward of 1:2 or more.

Selling Rules

  1. RSI indicator must be in the overbought region, which is above level 70 (refer to chart above).
  2. When RSI indicator crosses from the upper 70 level to the lower, this is your sell signal.
  3. Wait for a bearish candlestick to confirm a sell signal and when it happens, place a sell stop order at least 2 pips below the low of that bearish candlestick.
  4. place your stop loss 2-5 pips above the high of that bearish candlestick but if you see that it may be too close to the entry price, then place it a bit far away so that you do not get stopped out prematurely and one way to do this is to look for the nearest swing high and place yours stop loss a few pips above it.
  5. For take profit target, you can use the previous swing low or aim for a risk:reward of 1:2 or more.

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