The RSG System strategy for M1 - M5 periods
RSG System Strategy is based on the signals of only two simple indicators of Forex: EMA and MACD, but applying them several times and at different timeframes, we will get pretty good trading signals for transactions in small intervals, namely, at M1 and M5. To trade on the currency pair EURUSD (you can also trade on other currency pairs, but this is the best, in addition, all the indicator parameters are chosen specifically for this pair). Transactions will be concluded on the timeframe M5 (five-minute), the analysis should be conducted on the interval M1 (one minute).
Marketplace: ;
Currency pairsEURUSD;
Timeframe: M1-M5;
Indicators EMA and MACD;
Strategy: scalping;
Protective orders: StopLoss.
Setting indicators for the strategy
M1 timeframe:
— 3 exponential moving averages: EMA (21), EMA (34), EMA (144) - apply to close;
- MACD Histogram (13, 21, 1) - color red;
- MACD Histogram (21, 34, 1) - color orange;
- MACD Histogram (34, 144, 1) - color green.
I.e. we get a kind of "traffic light" - red, yellow, green - the signal to the transition to the interval M5.
How the chart looks like after all the indicators are installed, see below (click on the figure to enlarge it):
M5 timeframe:
- The same 3 exponential moving averages: EMA (21), EMA (34), EMA (144) - apply to close;
- MACD Histogram (21, 34, 1) - color green.
See below for what the chart looks like after all the indicators are installed:
Note that all of the MACD indicators signal line has a value of 1, so we will be interested only in MACD crossing with its "zero line" as signals.
RSG System Strategy Trading Signals
You can see an example of a deal in the picture below:
According to the author of the strategy, the maximum StopLoss it is enough to put at a distance of 10 points from the market entry (if it is executed according to all rules described above). However, in our opinion, it is better to place the insurance StopLoss under the nearest local minimums (for buying) or above the nearest local maximums (for selling).
At StopLoss at 10 points, TakeProfit is equal to 30 points. Or we do not set TakeProfit, and exit the trade in the following cases:
1) Red or orange MACD crossed its zero line - conservative exit from the trade.
2) As soon as the EMA (21) or EMA (34) on the M1 timeframe crosses the EMA (144) - moderately aggressive exit from the trade.
3) As soon as the EMA (21) or EMA (34) on the M5 timeframe crosses the EMA (144) - aggressive exit from the trade.
Additional rules of the RSG System trading strategy
If one of the MACDs (on any timeframe) has already crossed the zero line earlier and the other MACDs have confirmed this signal, you can make a trade, as well as under the condition that all MACDs have crossed the zero lines in the same direction sequentially.
Example:
а) on the M1 timeframe the green MACD is already above the zero line, and the other two have crossed the zero line upwards - feel free to enter the trade when the signal is confirmed on M5. But beware of divergences. If divergences occur, it is better to refrain from trading.
б) all 3 MACDs have crossed the zero line up on M1, and the MACD on M5 is already above the zero line - you can also enter a buy trade.