Trading Strategies Revealed – “RSI & Awesome Oscillator” review
Trend reversal trading strategy “RSI & Awesome Oscillator” is designed mainly for Forex and can be used on all currency pairs on any time-frame.
How to trade “RSI & Awesome Oscillator”
A trader should place a buy order when RSI is below 30 and Awesome Oscillator shows a green bar. A sell order should be placed when RSI is above 70 and Awesome Oscillator shows a red bar.
Initial back-test
To run a back-test we have coded a complete RSI & Awesome Oscillator trading strategy as a MetaTrader 4 Expert Advisor. During preliminary analysis we have identified that the best time frame for RSI & Awesome Oscillator trading strategy is 1 hour (H1). We have run a back-test of RSI & Awesome Oscillator trading strategy. For our test as a trade exit rule we have used a Trailing Stop of 30 pips which is launched after a trade has started and is modified each new 1 pip of profit. From our point of view, such approach allows to maximize profit and minimize drawdown. We have run the test for 2009.01.01-2020.11.24 using Every Tick modelling on EURGBP-H1, using 1:10 leverage, without reinvestment, assuming spread equals 10 ticks. These are the main parameters of RSI & Awesome Oscillator trading strategy performance at its non-optimized state:
| ROI | # of trades | Winning ratio | Max. drawdown |
| 2.24% | 2095 | 36.66% | 24.01% |
Trading data analysis
After running the initial test of a simple non-filtered strategy we perform a trading data analysis that allows to identify possible filters to use to make the strategy more profitable reducing the drawdown simultaneously. The following charts may give some possible insights on which filters to apply (time sessions, day of week limitation, trend strength threshold, overbought/oversold conditions, volatility range) to turn this strategy profitable should you decide to use this strategy in your investment portfolio:
Optimization
RSI & Awesome Oscillator can be used with other indicators to filter out losing trades and make entry signals more accurate. After analyzing trading data we have found the following insights which have helped us to make the RSI & Awesome Oscillator trading strategy profitable reducing it’s drawdown in 5 times:
- Trades that were opened at a too low and at a too high values of ADX have appeared to bring more losses when trading “RSI & Awesome Oscillator” trading strategy during 2009 – 2020. ADX shows the power of the current trend. It is more reasonable to take trades at the trend start.
(ROI increase 2.2% -> 5.8%, Drawdown reduction 24.01% -> 13.3%) - The majority of trades that were opened at a boundary state of RVI Signal were losing when trading “RSI & Awesome Oscillator” trading strategy during 2009 – 2020. It is preferred to take trades at a more stable market.
(ROI increase 2.2% -> 3.7%, Drawdown reduction 24.01% -> 16.8%) - The most profitable trades were opened at the middle value of DeMarker when trading “RSI & Awesome Oscillator” during 2009 – 2020. DeMarker aims to assess the directional bias of the market.
(ROI increase 2.2% -> 5.9%, Drawdown reduction 24.01% -> 10%)
Optimization results
We have analyzed data received from a test of RSI & Awesome Oscillator trading strategy during 2009 — 2020 years and applied some filters such as ADX, RSI and Stochastic. As a result, the profitability of the strategy has increased from 2.2% up to 5.8% and it’s drawdown has reduced from 24.01% to 4.76% using leverage 1:10.
Post-optimization back-test
Reducing the drawdown has allowed us to increase the leverage that can be used while trading this strategy up to 1:30, which in turn, has resulted in annualized ROI increase up to 184.06%!
Reducing the drawdown has also allowed us to use risk based lot calculation. Below you can see the back-test results using $10,000 initial balance and 3% risk per trade:
| ROI | # of trades | Winning ratio | Max. drawdown |
| 526.45% | 330 | 53.03% | 36.05% |
Analyze your trading strategy!
If you have a trading strategy that you want to analyze, optimize and increase its profitability (or even turn it from losing into a profitable Forex trading strategy) – feel free to contact us! Our trading data analysis team will respond to you within 24 hours clarifying all the details needed.
Our company specializes on automated trading systems and trading indicators development for the most popular trading platforms, such as MetaTrader 4/5, NinjaTrader 7/8 and cTrader.
If you need your own automated trading software designed based on your individual requirements, make a request for a free consultation with our team of professional programmers and find out the cost and terms of your project development.
Disclaimer: Hypothetical or Simulated performance results have certain limitations, unlike an actual performance record, simulated results do not represent actual trading. Also, since the trades have not been executed, the results may have under-or-over compensated for the impact, if any, of certain market factors, such as lack of liquidity. Simulated trading programs in general are also subject to the fact that they are designed with the benefit of hindsight. No representation is being made that any account will or is likely to achieve profit or losses similar to those shown. Past performance is not necessarily indicative of future results. The customer is responsible for using the product at his or her own risk and “Nordman Algorithms” is not responsible for any possible losses caused by use of the product, including but not limited to losses.
