Laguerre RSI Forex Trading Strategy

The Laguerre RSI forex strategy is a swing trading system that uses unique custom indicators that allows traders visualize zones of inactivity on the activity.

Howbeit, our main interest is in defining bullish and bearish market entries on timeframe’s starting from the five minute charts. Let’s get started below with the chart setup…

Chart Setup

MetaTrader4 Indicators: Laguerre_RSI_with_Laguerre_filter_2.ex4 (default setting), i-AMA-Optimum.ex4 (Input Variable modified; P=100), 8 EMA

Preferred Time Frame(s): 5-Minute, 15-Minute, 30-Minute, 1-Hour, 4-Hour, Day

Recommended Trading Sessions: Any

Currency Pairs: Any pair

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Buy Trade Example

Fig. 1.0

Strategy      

Long Entry Rules

Initiate a buy entry if the following indicator or chart pattern gets displayed:

  1. If the PaleVioletRed.ex4 line of the Laguerre_RSI_with_Laguerre_filter_2 custom indicator crosses its dotted line while below the 0.15 level, after which it then breaks above the 0.15 level (a sign that denotes that price is bullish), opening long position(s) is advised. The pink middle area denotes an “inactivity zone), where price is believed to be range bound, when the filled and dotted line of the indicator travel through this zone.
  2. If the orange dots on black line of the i-AMA-Optimum indicator crosses the blue line of the 8 EMA bottom up and stays beneath the 8 EMA line, price is said to be pressured higher i.e. a trigger to go long.

Stop Loss for Buy Entry: Place a stop loss 3 pips below immediate support.

Exit Strategy/Take Profit for Buy Entry

Exit or take profit if the following holds sway on the activity chart:

  1. Wait for the PaleVioletRed.ex4 line of the Laguerre_RSI_with_Laguerre_filter_2 custom indicator to cross its dotted line top downward while it’s above the 0.85 level, and subsequently breaks below this level as shown on Fig. 1.0, an exit or take profit is advised.
  2. If the orange dots on black line of the i-AMA-Optimum indicator crosses the blue line of the 8 EMA top downward, an exit or take profit is highly recommended.

Sell Entry Rules

Initiate a sell in the market if the following rules or conditions hold sway:

  1. If the PaleVioletRed.ex4 line of the Laguerre_RSI_with_Laguerre_filter_2 custom indicator crosses its dotted line while above the 0.85 level, after which it then breaks below this level, it is an indication that price is bearish.
  2. If the orange dots on black line of the i-AMA-Optimum indicator crosses the blue line of the 8 EMA top downward and stays above the 8 EMA line, price is said to be pressured lower i.e. a trigger to go short.

Stop Loss for Sell Entry: Place a stop loss 3 pips above immediate resistance.

Exit Strategy/Take Profit for Sell Entry

Exit or take profit if the following holds true:

  1. If the PaleVioletRed.ex4 line of the Laguerre_RSI_with_Laguerre_filter_2 custom indicator to cross its dotted line top downward while below the 0.15 level, and subsequently breaks above this level as shown on Fig. 1.1, an exit or take profit is advised.
  2. If the orange dots on black line of the i-AMA-Optimum indicator crosses the blue line of the 8 EMA bottom up, an exit or take profit is highly recommended.

Sell Trade Example

Fig. 1.1

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About The Trading Indicators

The i-AMA-Optimum is an optimized version of the Kaufman’s Adaptive Moving Average (AMA) that was originally developed by Perry Kaufman and finds use on short and long periods.

The exponential moving average (8 EMA) adds more weight to the latest data and reacts faster to recent changes in prices.

The Laguerre_RSI_with_Laguerre_filter_2 is a custom oscillator indicator that displays an “inactivity zone” i.e. the middle area shaded pink and uses the RSI to gauge oversold and overbought areas.

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