This is a breakdown of every H4 RSI mean reversion strategy trade closed this week by the market reversal alerts EA. You can download the set file used from the blog post on MQL5. This is an exhaustion strategy that trades only when price has pushed hard for a period of time and the RSI (relative strength index) indicator signals that the market is in an extended condition. As this strategy trades on the H4 timeframe, it is a lot slower than others, but will incur less risk and more accurate entries. Smaller weekly profits consistently banked over time. When this happens, typically a profit take move will start as the banks and institutional traders profit from the moves they have created. The EA detects a move starting in the opposite direction on a lower timeframe (either M15 or M5) by watching for a market structure break using the market reversal alerts indicator. The target for each position taken is just 1/2 of an ADR (average daily range) or 1/2 percent account gain, whichever comes first. If the move does not happen straight away, the strategy scales into trades at set distances (1/2 an ADR) from the initial trade when a reversal in structure is detected on the M5 timeframe. The full strategy is explained in the blog post here and is traded daily in the live rooms.

You will notice some trades are single entries which work either same day or the next trading day, these are the perfect setup and outcome for a mean reversion trade setup, but as we know the markets don’t give us the perfect trade very often. This is why position trading strategies are so effective, timing entries is the hardest part of trading and position trading eliminates the need to find a perfect entry. Other trades will be 2–3 trades per position, which is typical of the strategy. On some occasions, a strong push will mean the strategy needs to scale into multiple positions as the RSI gets embedded into either and extended position to the upside or downside (often called over bought or over sold). Holds for up to a week or so occasionally can occur, these will get a pullback and profit take on the move at some point, and we simply wait for the market structure to allow an exit, scaling out of the position is occasionally necessary, but the EA can also handle that automatically if and when required. This particular setup with the EA automatically scaled out of positions using automated drawdown control when 3/4 ADR is achieved, and it will close out 30% of the lot size. This keeps drawdown under control but also means some small losses as the EA keeps the average price of each position with an easy exit distance. You will see some losses in the P&L shown below which may not be screenshotted and these are just the EA managing open positions that are not closed this week.

Full strategy: Mean Reversion Strategy
Indicators used to trade this strategy: Market Reversal Alerts | RSI/TDI Dashboard
Automate the strategy: Market Reversal Alerts EA