📚Strategy "Balance + RSI"
This strategy is a fusion of the "Critical Imbalance" strategy and the technical indicator "RSI" (Relative Strength Index).
Step 1. Go to "Add Widget" and open the Trading View tab.
Step 2. In the Trading View tab, select the trading instrument and the timeframe of interest.
Step 3. On the chart tab, open the "1EX Indicators", select the "Balance indicator" and turn it on.
Step 4. Next, you need to select the appropriate Rolling period
IMPORTANT!!!
The "Rolling period" field is the time interval for which the indicator calculates a certain value.
To get better results, you need to choose a period that will be a multiple of 20-50 times your working timeframe on the instrument chart. Lower multiplicity means higher sensitivity, higher multiplicity means lower sensitivity.
Example: TF = 5 minutes, Period = 4 hours (48 candles of 5 minutes each).
Step 5. Open the "Indicators" and select the "Relative Strength Index" indicator, you do not need to configure the indicator, use its default settings.
After setting up, the workspace should take the following form:
The value of the indicator lines:
Green line - relative value of the dominance of green candles (upward dynamics).
Red line - relative magnitude of the dominance of red candlesticks (downward dynamics).
Description of the trading strategy!!!!!
Theory: The Relative Strength Index indicator allows traders to detect signs of oversold and overbought markets. To do this, the asset price is estimated on a scale from 0 to 100 over 14 periods. If the RSI is equal to or less than 30, this indicates oversold, and if above 70, it indicates overbought, thereby determining the price reversal points. When combining this indicator with the balance one, the probability of a price reaction to a reversal is doubled, since these two indicators contain the most important components in determining the pivot points.
Entry points to the deal
Select the critical unbalance value for the instrument and put a horizontal line on the indicator (optional, but convenient).
The critical imbalance will vary depending on the type of traded instrument (more volatile, medium volatile, less volatile). The higher the volatility of the instrument, the higher the critical imbalance.
The optimal value is considered to be from 0.67, since this value corresponds to the "Two-thirds" rule - going beyond two-thirds has a low probability, therefore such values are considered critical (game theory).
Next, you need to wait until the RSI goes beyond one of the boundaries, then after that a critical imbalance will occur and you can enter the transaction:
The signal in Long will be when the RSI drops below 30 and then a short imbalance appears
The signal in Short will be when the RSI rises above 70 and then a long imbalance appears
IMPORTANT!!!
If the imbalance appears simultaneously with the RSI, then we do not pay attention to such signals and wait for the imbalance to be even higher, after which we already enter into the transaction!
It is necessary for a perfect deal that the RSI first goes beyond the limits, and after a short time an imbalance appears!
In this strategy, you can also use the divergence/convergence of the RSI, but so that a critical imbalance is formed!
Exit points from the deal
Closing a position when the RSI approaches the opposite boundary.
The trading result in this situation is +0.42% excluding leverage.
Closing a position when the balance is restored.
The trading result in this situation is +0.43% excluding leverage.
Closing at the level of the point of control (POC).
The trading result in this situation is +0.5%, but at the same time, after fixing, the market immediately grew by +5.5% in about 5 hours.
CONCLUSIONS:
This strategy displays the pivot points much better than the "Critical Imbalance" strategy and the "Relative Strength Index" indicator separately. It may have less potential for profit, but at the same time it has more profitable trades in quantity and less risk.
IMPORTANT! Trading involves risks. The user is solely responsible for their actions or inactions when using the described trading strategy. The strategy and its description are for informational purposes only. The information provided here does not constitute personalized investment advice. News, articles, expert comments, research, forecasts, and other information are presented without considering any specific investment profile, and the financial instruments or operations mentioned may not align with the expected returns, investment horizon, or acceptable risk levels for any particular user. Company 1EX is not responsible for any potential losses resulting from trades based on the described strategy or investments in the financial instruments mentioned in this publication.
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