Reversal Trend Strategy Forex

The Reversal Trend Strategy is a trading system that utilizes a combination of technical indicators and trend analysis to generate buy and sell signals in the forex market. It operates on three timeframes (H4, H1, M30) for the supported currency pair.

1. Technical Indicators Used in the Strategy

1. RSI (Relative Strength Index)
2. MFI (Money Flow Index)
3. SMA (Simple Moving Average)

2. Trend and Signal Identification

• The strategy recognizes trends by comparing closing prices between the current candle and a candle from 4 periods ago:
  • Uptrend - current price is higher than the price from 4 periods ago
  • Downtrend - current price is lower than the price from 4 periods ago
• The strategy counts consecutive candles in a trend. When the trend reaches a specific level, the strategy looks for trading signals in the opposite direction.

1. Buy signals (BUY) are generated during a downtrend when:
   • The downtrend has reached one of three required levels
   • RSI is below a specified buy threshold (different for each signal)
   • MFI is below a specified buy threshold (different for each signal)
   • The difference between RSI and SMA is within a specified range
   • The difference between MFI and SMA is within a specified range
2. Sell signals (SELL) are generated during an uptrend when:
   • The uptrend has reached one of three required levels
   • RSI is above a specified sell threshold (different for each signal)
   • MFI is above a specified sell threshold (different for each signal)
   • The difference between RSI and SMA is within a specified range
   • The difference between MFI and SMA is within a specified range

3. Risk Management

1. Stop Loss (SL) - each order has a dynamic SL in the range of 3-5% for positions
2. Take Profit (TP) - each order has a dynamic TP in the range of 1-3% for positions
3. Position Size - calculated based on the percentage of capital and available leverage
4. Maximum Number of Positions - the system allows for limiting itself to simultaneous positions, which allows for the regulation of the frequency of position entry

4. Trading Suspension Conditions

• Trading is suspended in the following cases:

1. Trading Hours:
   • Outside the hours of 21:50-02:50 CET (the strategy does not trade during low liquidity periods)
   • During holidays (December 24-26, December 31, January 1-2, July 4)
2. Market Conditions:
   • When the spread exceeds a specified maximum level
   • Minimum time between transactions (MIN_TRADE_INTERVAL = 300 seconds)

5. Additional Functions and Strategy Features

1. Multiple Entries - the strategy can add to positions when the price moves by a specified percentage from the first entry
2. Parameters for Different Timeframes - each signal has dedicated parameters for three timeframes (H4, H1, M30)

6. Key Parameters Affecting Trading Decisions

1. RSI and MFI Thresholds - determine when indicators show overbought/oversold levels
2. Maximum Differences Between RSI/MFI and SMA - determine if the trend has adequate strength
3. Take Profit and Stop Loss Percentage - affect the risk-to-reward ratio
4. Trend Tracking Parameter - counting consecutive candles in a trend to identify reversal points
5. Maximum Spread - control of transaction costs
6. Capital Risk Percentage - determines position size