New article Area method has been published at mql5.com:
"area method" trading system works based on unusual interpretation of
the RSI oscillator readings. The indicator that visualizes the area
method, and the Expert Advisor that trades using this system are
detailed here. The article is also supplemented with detailed findings
of testing the Expert Advisor for various symbols, time frames and
values of the area.
A regular trading method based on the RSI
indicator signals implies indicator evaluation with a view of
overbuying/overselling, searching for divergence between indicator
readings and the price, reversal after the indicator visits
overbought/oversold areas, failure swing. Thus, at least four signals
are used for the technical analysis of the RSI oscillator, and that
complicates the decision making system.
We also know that the RSI indicator can't be in the overbought area (overs 70)/oversold area (under 30) for a long period of time – it will definitely return and cross the 50 middle line:
Fig. 1. The RSI oscillator always returns from the overbought/oversold areas
fig. 1 shows that the total time the oscillator spent in the
oversold/overbought areas is very insignificant in comparison with the
rest of the time. Also, RSI crosses the 50 middle line after entering
overbought/oversold areas. The fact that the RSI oscillator always
returns and crosses the 50 line, and that the technical analysis of the
RSI oscillator readings should be simplified formed the base for
developing the area method.
area method suggests evaluating readings of the RSI oscillator based on
one criterion: the area formed by the oscillator over/under the 50
line. And this value will be used to describe the overbought/oversold
Fig. 2. Area method — evaluating area over/under 50
In this case, the signal for opening a position is the size of the area over/under the 50 line since its last intersection with the RSI indicator.
Author: Karputov Vladimir
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