We’re going to show you how to build a traditional trading system based on the RSI indicator.
We’ll start with a daily chart for Harmony Gold Mining. We go to the Insert Menu, select New Trading Strategy and no template.
Now we’re on the Long Entry tab and we’re asked to add a condition for the Entry. Because our rule is going to be RSI < 30, we select A < B. Click on A and go back to the indicator button. We find the Price Momentum indicators, and then RSI. For B, we’ll type in 30. That completes our Long Entry condition.
Remove the check mark on the Long exit rule because we’re going to build a reversal system. On the Short Entry tab, click on the check box beside “Sell short if all of the following are true”. The box is no longer “grayed out” and you can enter Short Entry conditions. Click on the Add Conditions button. We’ll go back to the Relational category, and this time select A > B. We want A to be the RSI indicator. If we click on the Current Wizard and click on some plus signs, we can find the RSI indictor. For B, we enter 70. Click finished and that’s the end of our rules.
Click on the next button, then click on the Modify Trading Strategy Parameters button. We’ll use the defaults. Click next and the optimal trading strategy is automatically created. When optimization is finished, click on the detailed analysis button to view reports on trading results, a list of trades, and the trading rules.
We can hide the close to get a better look at the trading signals. Right click on the chart and select “Hide/Unhide data” and removing the check mark by the close.
We can add an equity curve by going to the Insert Menu, new indicator, and then selecting the Trading Strategy, System Information category. We’ll choose the first indicator, System Equity, all trades.