Rvi trading strategy

How do I use Relative Vigor Index (RVI) to create a forex trading strategy?

A forex trading strategy designed to make maximum profits from a long-term uptrend can be created using the Relative Vigor Index, or RVI, in conjunction with other technical indicators. The RVI compares closing price to price range and provides a reading of the strength of price movement up or down. Higher values for the RVI indicate increasing trend strength, while lower values indicate a lessening of momentum. As a momentum indicator, the slope of the RVI often changes direction ahead of price.

In a long-term uptrend, there are back-and-forth movements of price as it advances in the direction of the overall trend, retraces downward and then turns back to advance further in the direction of the existing trend. The RVI can be employed by a trader who, rather than using a buy-and-hold trend trading strategy, wants to maximize profits by moving in and out of buy positions in accord with peaks and retracements that occur within the trend.

Other technical indicators are used to confirm trading signals given by the RVI. The strategy is as follows:

Once the trader has a long position established in an overall uptrend, he or she monitors the RVI for bearish divergence from price. Price makes a new high, but the RVI does not make a corresponding new high. Confirmation of an impending retracement is sought by using another technical indicator, the Relative Strength Index, or RSI. If the RSI indicates overbought conditions in the market by readings above 70, this is taken as a confirming signal of the RVI divergence indication. The trader takes profit on half of his or her existing buy position. Assuming a retracement occurs, the trader looks to re-establish his or her full long position when the RVI shows a bullish divergence from price and the RSI indicates oversold conditions. The trader continues taking half profits, then resumes a full long position while the overall uptrend remains intact, as determined by price remaining above the 100-period moving average, or MA. On a close below the 100 MA, the trader closes out his or her entire position.

What is a common strategy traders implement when using the Relative Vigor Index (RVI)?

A common trading strategy that can be implemented using the relative vigor index (RVI) is to employ it in the same manner the moving average convergence divergence (MACD) is often used – trading divergence of the indicator from price.

The RVI is a momentum indicator, intended to provide a measurement of trend strength. It measures the strength or weakness of price action by comparing a stock's closing price to its trading range for the day. When the RVI shows bearish divergence from price by failing to move to a new high when a stock's price moves to a new high, it is commonly interpreted as an indication that the stock is exhausting its upward momentum and may reverse direction to the downside. This situation offers a short selling profit opportunity for traders.

Because momentum indicators most often precede price in changing direction, meaning that price may continue to advance higher beyond the point in time when the RVI first shows divergence, traders typically wait for confirmation of a trend reversal from another technical indicator. A trading strategy using the RVI in conjunction with moving averages can be created as follows:

• When a stock has been in a sustained uptrend for some period of time, monitor the RVI for an indication of bearish divergence from price.

• When a bearish divergence by the RVI appears, wait for confirmation of a possible trend reversal to the downside to be indicated by the 10-period moving average crossing below the 20-period moving average.

• Once confirmation of the RVI signal is provided, initiate a short sell trade, placing a stop-loss order above the most recent high price.

• An initial profit target can be chosen at the price level that represents either a 20% or 35% retracement of the previous uptrend.

Simple forex trading strategy of RVI indicator.

This is a basic RVI trading strategy. This strategy can be used in short time for scalping purpose. Beginners can follow this simple forex strategy. You can get reverse signal of the market from this strategy. So you can gain a lot of pips from it. This strategy also can be used for trend changing.

You have to find buy signal when RVI indicator stays at low level. When a crossover occurs at the low level like as below image, then you can buy. After crossover you can wait for a bullish candle for confirmation of your buy entry. You can take another buy entry when RVI indicator crosses 0.0 level from lower to upper.

You have to find sell signal when RVI indicator stays at higher high. When a crossover occurs at the top level like as below image, then you can sell. After crossover you can wait for a bearish candle for confirmation of your sell entry. You can take sell entry when RVI indicator crosses 0.0 level from upper to lower.

You need to set stop below the swing low for buy entry and above the swing high for the sell entry. You can also set 30-40 pips stop loss for every entry.

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Relative Vigor Index (RVI) Forex Trading Strategy.

The Relative Vigor Index (RVI) Forex Trading Strategy is based on a lesser know forex indicator called the Relative Vigor Index or the RVI.

The RVI indicator is an indicator that is not so popular as its cousins, the Stochastic Indicator and the Relative Strength Idex (RSI) indicator. Most forex trading systems either consists of the stochastic or the RSI indicator and less of the RVI indicator.

However, in this post, you will learn about how to trade the RVI indicator.

If you want to know more more about the RVI indicator, I found this article really interesting, you can check it out:

Currency Pairs you can trade: Any.

Traidng Timeframes: 1hr and above.

Forex Indicators: only the Relative Vigor Index is required.

Refer to this chart below for the buying and selling rules:

A buy signal is generated when the RVI indicator is below the zero level and is heading up after the crossover of RVI indicator. After cross over of the RVI indicator happens, you just wait for a bullish candlestick. Place a buy stop order at least 2 pips above the high of that candlestick and place your stop loss 2-5 pips below that candlestick’s low or if that will be too close to the entry price, the place your stop loss just 2 pips above the nearest swing low. Aim for a take profit that is 2 or 3 times more than what your initial risk was or if not use the previous swing high as your take profit target level and even that, make sure it is 2 or 3 times more than what you risked initially.

Sell Rules.

A sell signal is generated when the RVI indicator is abovethe zero level and is heading down after the crossover of RVI indicator. After cross over of the RVI indicator happens, you just wait for a bearish candlestick signal Place a sell stop order at least 2 pips above the low of that candlestick and place your stop loss 2-5 pips above that candlestick’s high or if that will be too close to the entry price, the place your stop loss just 2 pips below the nearest swing high. Aim for a take profit that is 2 or 3 times more than what your initial risk was or if not use the previous swing low as your take profit target level and even that, make sure it is 2 or 3 times more than what you risked initially.

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