The Secret Mindset ยป RSI + ADX + EMA strategy
Overview
This is the scripted implementation of the The Secret Mindset (TSM) channel's RSI + ADX + EMA strategy that was described in their video titled Scalping Trading Was Impossible, Until I Found How To Combine EMA RSI ADX Indicators (FULL Strategy).
The video is available at https://www.youtube.com/watch?v=vBM0imYSzxI.
The script can be used to backtest the strategy, and also to set alerts for automated trading purposes.
Indicators used in this strategy:
Settings
The default settings for each indicator is as per the instructions in the video.
RSI Settings
ADX Settings
EMA Settings
Long
Entry Criteria
- Price above the 50 period EMA
- ADX above 30
- Previous candle's RSI below 20, current candle's RSI above 20
Please see the video at 07:59 for a long trade example.
At 11:14 you are told to only enter a position if the candle following the entry signal candle "takes out" the high of the signal candle.
The way this can be accomplished with the strategy script is to use a stop entry order with the with the entry price set to the high of the entry signal candle:
Notice also how the Order Fill Max. Wait (Bars) is set to 1. This is done so that the strategy only waits a single bar following the entry signal candle to fill the order before cancelling it and looking for new entries.
Stop Loss
As told in the video, the stop loss has to go below (i.e. set to the low) of the entry signal candle.
The way this can be achieved in the script is to use the Wick based stop loss strategy:
The Wick based stop loss strategy sets the stop loss to the low of the entry signal candle. You also have the option to offset the calculated price, by configuring a Stop Loss Wick Price Offset.
Take Profit
The video suggests to use a risk to reward ratio of 1:1 or 1.5:1 for the take profit.
This can be achieved by using the Risk multiplier take profit strategy, with the risk multiplier set to 1.5:
Short
Entry Criteria
- Price below the 50 period EMA
- ADX above 30
- Previous candle's RSI above 80, current candle's RSI below 80
Please see the video at 09:04 for a short trade example.
The same criteria applies to short trades as well, meaning that a position will only be entered if the low of the entry signal candle is "taken out" on the following candle (please see above for more explanation).
Stop Loss
The same logic applies here as for the long trades; the only difference is that the stop loss has to go above (i.e. set to the high) of the entry signal candle.
Take Profit
The same rule applies here, use a 1:1 or 1.5:1 risk reward ratio for the take profit.