EMA BANDS WITH RSI FILTER ADVISOR: TREND INDICATORS + OSCILLATORS

EMA BANDS WITH RSI FILTER ADVISOR: TREND INDICATORS + OSCILLATORS

EMA BANDS WITH RSI FILTER ADVISOR: TREND INDICATORS + OSCILLATORS

Let’s do some survey on the EMA’s Bands with RSI filter trading strategy on standard oscillators and trend indicators. The advisor and testing.

Hello, dear readers. After a long break, we invite you to come back to the topic of automation of trading strategies, and start with a fairly simple trend trading strategy based on the classic combination of trend indicators and oscillators, EMA’s Bands with RSI filter. Let’s see how efficient such a set of tools has remained for the modern market.

STRATEGY INDICATORS

  • ЕМА (5);
  • ЕМА (21);
  • RSI filter (7);
  • MACD with EMA (10, 20,3, 7).

STRATEGY COPYRIGHT RULES

EMA’s Bands with RSI filter – a strategy for intraday trading, without a usage time limit, yet with a multicurrency option. A value for the stop loss, according to the rules, a trader had to pick up on his own, without going beyond the 2-5% risk limit per trade. In short, it looks like this:

  • Currency pairs: any.
  • Timeframe: M15 and higher.
  • Trading hours: any.
  • Risk management: risk – no more than 2-5% of the deposit per transaction.

After putting all the indicators on the chart, your desktop screen should look like this:

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Fig.1. Trading strategy pattern

STRATEGY TRADING SIGNALS

A buy transaction is to be opened, provided the following combination of the rules is complied with:

  • The exponential moving average with a period of 5 intersects the EMA (21) from the bottom up.
  • The MACD shows a value greater than zero.
  • Oscillator RSI filter (7), which in this strategy is presented in the form of bars, shows an upward trend – green bars.
  • Put stop loss under the nearest local minimum.

2

Рис. 2. A buy deal under the trading strategy pattern.

A sell transaction is to be opened provided the opposing indicator signal appears.

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Fig. 3. A deal to sell pattern.

The author offers several options for a transaction support, based on work with the indicators as well as simply math approach. You can learn this in more detail from the description of a trading strategy.

TRADING ROBOT TESTING

Since the author’s terms of trade are very versatile, covering those in a single survey is problematic. Hence, we have set some limitations for this text. To test the robot we will use an initial deposit of $10000, the H1 timeframe and the standard advisor’s settings. As a deal closing terms take a combination of Take Profit = 2 * Stop Loss, because closing on the reading of the EMA indicators have not yielded positive results. Test Period: the year of 2013 – the present.

TRADING ADVISOR SETTINGS

The EMA Lines Settings

  • EMA1_Period=5 — EMA fast line period;
  • EMA2_Period=21 — EMA slow line period.

The MACD Settings

  • FastEMA=10;
  • SlowEMA=20;
  • SignalEMA=1;
  • MAofSignalPer=7.

The RSI Settings

  • PeriodRSI=14.

TakeProfit Settings – TpType parameter

  • SL*2 — TakeProfit calculated as StopLoss value * 2;
  • EMACross — closing on inverse intersection of EMA lines;
  • FunCross — closing on entering price line into the region between the EMA lines.

Testing is carried out by fast method, because the final results do not practically differ from the tests carried out on all ticks.

Hence, in the course of the survey we have conducted tests on 23 currency pairs (5-t-signal), as well as gold at fixed spread. Although the results turned out to be not the most successful on many instruments (more details in the file at the end of the article), but some of them proved to be interesting.

The most effective was a couple CADCHF, which yielded 13% profit out of 155 trade deals with a maximum drawdown at 7.35%.

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Fig. 4. Testing of the adviser on copyright rules on CADCHF, H1.

Slightly less successful result yielded the cross rate AUDNZD: 9% profit out of 134 trade deals with a drawdown of 5.8%.

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Fig. 5. Testing of the adviser on copyright rules on AUDNZD, H1.

Last but not the least, of the three leaders was a pair EURUSD, which showed 7.5% profit out of  126 deals, though with a very large drawdown of 11.36%.

Fig. 6. Testing of the adviser on copyright rules on EURUSD, H1.

Fig. 6. Testing of the adviser on copyright rules on EURUSD, H1.

Of course, over a period of 2 years 13% in profits is very small, given the amount of drawdown. However, the potential is visible in the strategy, taking into account the progress of highly volatile pairs with similar-looking drawing of the balance graph. For further research, we recommend carrying out tests on all sufficiently volatile currency pairs with slightly greater spreads on intraday timeframes, as well as, trying to optimize parameters of moving averages.

The advisor is presented in the open source, available for further development and modernization. We invite you to continue the discussion in the comments on the article or on the branch of the forum as indicated below.

Wish you successful trading, and meet you all in the next issue!

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