“RSI-Moving Average” MARTINGALE Trading Strategy

“RSI-Moving Average” MARTINGALE Trading Strategy (based on Larry Connors’ time, price, and scale-in trade principles).

The “RSI-Moving Average” MARTINGALE Trading Strategy can be applied to stocks, commodities, currencies, cryptocurrencies, and any other market that you can access charting prices.

Here are the “RSI-Moving Average” MARTINGALE trading rules for buy signals:

• The price must trade above the 200-day EMA.
• 2-period RSI must be oversold (below 25 level) for two consecutive days.
• On the second day, buy 10% of your position on the close.
• On the third day, if the price closes lower than your previous entry price, average in and buy 20% more of your position.
• On the fourth day, if the price closes lower than your previous entry price, average in and buy 30% more of your position.
• On the fifth day, if the price closes lower than your previous entry price, average in and buy 40% more of your position.

EXIT Rules

• When the 2-period RSI is in overbought territory (above 75 level) take profits at the closing price of that day.

 

Here are the “RSI-Moving Average” MARTINGALE trading rules for sell signals:

• The price must trade below the 200-day EMA.
• 2-period RSI must be overbought (above 75 level) for two consecutive days.
• On the second day, sell 10% of your position on the close.
• On the third day, if the price closes higher than your previous entry price, average in and sell 20% more of your position.
• On the fourth day, if the price closes higher than your previous entry price, average in and sell 30% more of your position.
• On the fifth day, if the price closes higher than your previous entry price, average in and sell 40% more of your position.

EXIT Rules

• When the 2-period RSI is in oversold territory below 30 level take profits at the closing price of that day.

 

The ideal “RSI-Moving Average” MARTINGALE trade scenario is when we’re dealing with strong market trends.

Larry Connors’ 2 periods RSI is a very aggressive “filter” that is designed to help traders enter the market even on small pullbacks that otherwise you wouldn’t be able to capitalize on.

However, because we use a very short-term period for the RSI indicator it’s possible for the “RSI-Moving Average” MARTINGALE trading strategy can work in a ranging market as well. But, you should test this idea first as we prefer using the system with trading markets.