RSI Trend Range Trade (40-80 / 20-60)

Entry Logic

• Exact Entry Trigger: In an uptrend, enter long when RSI dips to the 40-50 zone and turns up. In a downtrend, enter short when RSI rallies to the 50-60 zone and turns down.
• Confirmation: A bullish/bearish candle close is required for entry.
• Timeframe: 15-minute, 60-minute.
• Location: Near a key moving average like the 20 or 50 EMA.
• Market Condition: Established trend.

Exit Logic

• Profit Targets: Target the prior swing high for longs, or swing low for shorts.
• Trailing Stop: Trail the stop below the 20-period EMA for longs.
• Opposite Signal: Exit when RSI crosses the 70 level for longs, or 30 for shorts.

Stop Loss Structure

• Hard Stop: Place stop 1 ATR below the entry candle low.

Risk Management Framework

• Risk Per Trade: 1% of account capital.
• R:R Requirement: Minimum 2:1.

Position Sizing Model

• Sizing Approach: Fixed fractional.

Trade Filtering

• Market Conditions to Avoid: Ranging markets.

Context Framework

• Trend Direction: Only trade in the direction of the established trend.

Trade Management Rules

• Breakeven: Move stop to breakeven after price moves 1R in profit.

Time Rules

• Optimal Window: Mid-morning to late afternoon.

Setup Classification

• A+ Setup: Entry aligns with a pullback to the 50-period EMA on the daily chart.

Market Selection Criteria

• Instruments: Trend-following stocks and indices.

Statistical Edge Metrics

• Win Rate: 60-70%.
• Profit Factor: 1.8.
• Expectancy: 0.5R.

Failure Conditions

• Strategy Fails: When the trend reverses.

Psychological Rules

• Discipline: Patience to wait for the pullback to the correct RSI zone.

Advanced Components

• MTF Alignment: The daily and weekly charts must show a clear trend.

Location

• Strongest: As a continuation trade within a strong, established trend.