Before we consider RSI trading strategies, it’s worth beginning with the small definition of the RSI.
Gambit strategy: balance of risk and gain
Gambit trading strategy is a bold attempt to gain maximum profit while not losing sight of risk. But I should warn you, that to use it you should school yourself to patience because for all conditions to meet you might need lots of time. The good thing is that this strategy worth it; you can get big profits from waiting for the right moment to come without taking additional risks.
The strategy was designed by Walter T. Downs, a dedicated chess-player, and mathematician, for calm and lucrative trading on the D1 time interval. But it turned out that it works on the H4 timeframe as well. With this strategy, you need only one indicator to receive signals to enter the market – Bollinger bands.
If there is a bullish trend – you should BUY on rollbacks from the upper Bollinger line. If there is a bearish trend - SELL on the rebounds from the lower line.
The minimum and maximum of the "signal" candles (2) should be located above the minimum and the maximum of the previous candles (1).
The closing price of the signal candle should be in the lower part of the candle’s range.
Central Bollinger line should be moving downward for at least 10 consecutive days.
If all these conditions are met, at the opening of the third candle followed by the "signal" candle (3) we can open shorts. Stop Loss should be set slightly above the maximum of the "signal" candle (2). On the fourth day after we opened our position, we should place Stop Loss at the breakeven point (the opening point). The deal should be closed when the price crosses the lower green Bollinger line.
Minimum and maximum of the "signal" candle should be located below the minimum and maximum of the previous candle.
The "signal" candle should be closed above the middle level of the entire range of the candle and above the center Bollinger line.
Central Bollinger line should rise in the course of 10 consecutive days.
If all these conditions are met, we enter the market long at the opening of the next candle followed by the "signal" candle. Stop Loss should be placed below the minimum of the "signal" candle. On the fourth day after we opened our position, Stop Loss should be placed at the breakeven point (the opening point). We should close the deal when the price crosses the upper green Bollinger line.
When a beginner trader is looking for information how to start trading with profit, he/she usually comes across an advice to follow a trend.
Have you ever noticed that political events affect markets even more than the economic data