RVI Super Trend Forex Trading Strategy

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RVI Super Trend Forex Trading Strategy

Most new traders look for a strategy that is perfect, one which should allow them to incur no losses and only profits and often they would also want a strategy that should allow them to win big amounts every time they trade. This is what many traders would call the “Holy Grail” and many are still on the hunt for it.

Traders should understand that trading the forex market or trading any other tradeable instrument for that matter is a risk management game. A trader should be able to accept the fact that trading will always entail risks just as any other business does. Traders can win on some trades and lose on some trades. There is no perfect strategy or a “Holy Grail”. This is a fact that traders should learn to accept.

So, if traders can win or lose any trade using any strategy, how would traders make money with something that is seemingly dependent on chance? Traders can still make a lot of money even without a perfect strategy because trading is not dependent on chance. Instead, trading is all about probabilities. In order to profit from the market, traders should either win more often than they are losing or win bigger profits than the losses they are incurring on a losing trade.

RVI Super Trend Forex Trading Strategy is a strategy that has the potential to allow traders to win huge profits compared to the risks they are placing on a trade. It leans more towards winning bigger profits compared to the losses rather than winning more often. In other words, it allows traders to take trades with high risk-reward ratios. It uses a couple of reliable indicators that allow traders to catch mid- to long-term trends as a trend starts to develop.

Relative Vigor Index

Relative Vigor Index (RVI) is a trend-following indicator which is a part of the oscillator family of indicators. It is displayed in its own indicator window plotting two oscillator lines.

RVI measures the strength of a trend by comparing the trading instrument’s closing price to its historical price range. It then averages out the results in order to create a smoothing effect.

The RVI indicator plots two lines. It plots the main RVI line and a signal line. The signal line is also derived from the main RVI line.

The RVI line and the signal line oscillates on its own window while following the movement of price action based on its swing points. The line can move from positive to negative or vice versa.

The RVI can be used in a variety of ways. Traders can use the crossover of the lines from negative to positive or vice versa as a trend reversal signal. Traders can also use the crossover of the main RVI line and the signal line as an earlier indication of a possible trend reversal. Because the RVI lines mimic the movement of price action, divergences between the peaks and troughs of the RVI lines and the swing points of price action can also be used as a support for a strong trend reversal signal.

HalfTrend – 1.02

HalfTrend – 1.02 is a trend following technical indicator which is plotted on the price chart. It plots a line which follows price action quite closely. This line is based on the median of price over a period of time.

The HalfTrend – 1.02 line changes color whenever it detects a trend reversal. It changes to dodger blue whenever it detects a bullish trend reversal and red whenever it detects a bearish trend reversal. Traders can use the changing of the color of the line as a trend reversal entry signal.

Trading Strategy

This strategy trades on mid- to long-term trend reversal signals based on the confluence of the Relative Vigor Index and the HalfTrend – 1.02 indicators. However, instead of taking every signal that is developed, trades are aligned to a longer-term trend.

The 200-period Exponential Moving Average (EMA) is used to identify the long-term trend direction. It is based on where price action is in relation to the 200 EMA line, as well as the slope of the 200 EMA line. The movement pattern of price action should also support the trend direction indicated by the 200 EMA line.

On the RVI indicator, the two lines should crossover the midline, which is zero. The direction of the crossover is indicative of the direction of the trend reversal.

Then, on the HalfTrend – 1.02 indicator, the line should change color indicating a trend reversal.

Confluences of signals coming from the two trend following indicators that are aligned with the 200 EMA line trend direction will be considered as a valid trade setup.

Indicators:

  • HalfTrend – 1.02
    • Amp: 8
  • Relative Vigor Index
    • Period: 28
  • 200 EMA

Preferred Time Frames: 1-hour, 4-hour and daily charts

Currency Pairs: FX majors, minors and crosses

Trading Sessions: Tokyo, London and New York sessions

Buy Trade Setup

Entry

  • Price action should be above the 200 EMA line.
  • The 200 EMA line should slope up.
  • Price action should be creating higher swing points.
  • The RVI lines should cross above zero.
  • The HalfTrend – 1.02 line should change to dodger blue.
  • Enter a buy order on the confirmation of these conditions.

Stop Loss

  • Set the stop loss below the HalfTrend – 1.02 line.

Exit

  • Close the trade as soon as the HalfTrend – 1.02 line changes to red.

RVI Super Trend Forex Trading Strategy

RVI Super Trend Forex Trading Strategy 2

Sell Trade Setup

Entry

  • Price action should be below the 200 EMA line.
  • The 200 EMA line should slope down.
  • Price action should be creating lower swing points.
  • The RVI lines should cross below zero.
  • The HalfTrend – 1.02 line should change to red.
  • Enter a sell order on the confirmation of these conditions.

Stop Loss

  • Set the stop loss above the HalfTrend – 1.02 line.

Exit

  • Close the trade as soon as the HalfTrend – 1.02 line changes to dodger blue.

RVI Super Trend Forex Trading Strategy 3

RVI Super Trend Forex Trading Strategy 4

Conclusion

This trading strategy is a decent trend reversal trading strategy. It uses the HalfTrend – 1.02 and the Relative Vigor Index indicator as a basis for its trade setup. These indicators with these parameters are complementary. Mid-term trends that have strong momentum or is gaining momentum would tend to cause a confluence of trend reversal signals on the two indicators.

Traders should still take price action characteristics into consideration when trading this strategy. Traders can easily identify good trade setups using this strategy and pick out trade setups that have a good price action support.

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