RSI_BANDS_MA Indicator For MT4
Table Of Contents:
- RSI_BANDS_MA Indicator For MT4
- Trading ideas with the RSI_BANDS_MA Indicator For MT4
- RSI_BANDS_MA Indicator For MT4 - Conservative Sell
- RSI_BANDS_MA Indicator For MT4 - Conservative Buy
- RSI_BANDS_MA Indicator For MT4 - Conclusion
The RSI_BANDS_MA Indicator For MT4 plots a Moving Average of the Relative Strength Index (RSI) to signal entries post reversal from overbought and oversold zones. When the RSI moves below the oversold level and then turns back up, while crossing the Moving Average, a buy signal is generated. Conversely, when the RSI moves in to the overbought area and then turns back down, while crossing the Moving Average, a sell signal is triggered.
Trading ideas with the RSI_BANDS_MA Indicator For MT4
What is interesting about this indicator is that it comes with two different versions which you can insert into your trading chart as shown in the image below.
The above image shows how you can trade aggressively if you looking to win a huge sell trade. The very bottom RSI bands MA indicators is my main indicator which gives me signals. So you can use both indicators as confirmation tools but it is not necessary if you are trading with aggression.
The idea is to wait for the market to reach an overbought pricing sector and then wait for the magenta line to cross the thick blue line to the downside. I have circled the signal for you so that you can see for yourself that this way of trading is rewarding but quite risky considering the high frequency of such sell signals arising all the time. In the next example, we will follow the same logic - the only difference is we referencing an aggressive buy trading opportunity as shown in the image below.
With reference to the above diagram the very bottom RSI Bands MA indicator is my trigger indicator which gives me the go-ahead buy signal. However, you can use both indicators as confirmation resources but as I mentioned earlier that this is not necessary if you are gonna trade with aggression. The aim is to wait for the market to reach an oversold area and then wait for the magenta line to cross the thick blue line to the upside as per the screenshot.
This manner of trading can be quite rewarding but it is risky because of the high frequency of fake signals that pop-up often. Nevertheless, the market did indeed rally up after the identified buy signal. However, this manner of trading may not be suitable to those type of traders who are considered as risk-averse traders.
RSI_BANDS_MA Indicator For MT4 - Conservative Sell
So to cater to those traders - I am actually showing you how to trade conservatively starting off with the sell trade set up as shown in the image below.
In this example you can see that I kept the very bottom RSI bands MA indicator from the previous examples - meaning that I am only using one indicator to give me signals. It is a sell example - which is different because of how I configured my indicator. What I did was actually increase the period settings and reduce the noise in my signals so that I can have more high probability trade setups.
The default period settings are too low hence why you get exposed to more fake signals. The idea here is to wait for the market to reach an overbought region and then wait for the magenta line to cross the thick blue line to the downside. I have circled the signal for you below in the actual screenshot. The overbought zone is seen by the magenta line touching and crossing the upper band which usually leads to a sell but you must wait for the line to cross back down as mentioned before. This might seem as though it is not rewarding in terms of risk to reward but it is fairly rewarding in terms of generating a lot more wins than losses.
RSI_BANDS_MA Indicator For MT4 - Conservative Buy
Up next we have a similar example - just that we use the same strategy to open a buy position instead.
Just like the previous example the very bottom RSI indicator from the previous examples is the one I kept as my only indicator to give me a signal. This buy example is different to our last long trade because of how I configured my indicator. I increased the value of my period settings to reduce the noise in my signal so that I can have more high probability trade setups.
The default period settings I felt were just too low hence why you got exposed to more fake setups. The aim here is to wait for the market to reach an oversold zone which is seen by the magenta line touching and crossing the lower band which usually leads to a buy but you must wait for the line to cross back up as suggested earlier.
RSI_BANDS_MA Indicator For MT4 - Conclusion
Based on the different examples which I have provided in this article - you are able to become more appreciative of the RSI Bands MA indicator because it is versatile in its nature. By versatile, I mean that it allows traders of different risk appetites to be catered for. So if you are an aggressive trader there is a manner in which you can go about using this indicator. However, if you are also a risk-averse type of trader you can also have your own way of trading as I have indicated in the two conservative trading examples above.
But the underlying principles of both trading groups and respective strategies that cater to them have a similar theme in terms of how you go about trading. Meaning that in all instances you need to wait for the indicator to reach an overbought or oversold region to begin your signaling processes for your different trade setups.
In the first few examples I mentioned how you can use it in an aggressive sense which comes with its own high-risk profile but the rewarding aspect of it is that the risk to reward is handsome and therefore you could end yielding some good profitable results if you strike a win. But however, if you are not this type of trader you can always adopt the conservative approaches which we made mention earlier. And as you grow in confidence with the conservative method of trading you can then work your way up and into those aggressive trade setups and then train your eye to identify high probability trading situations that could bring you steady portfolio growth.