RMI Trend Strategy and Backtesting Guide
Introduction
- Explanation on how to determine the best settings for the RMI Trend indicator.
- Steps to backtest the RMI Trend indicator.
- Optimization of the best risk-to-reward ratio.
Steps to get RMI Signal
- Getting the RMI Indicator: Add RMI to your chart and create a working copy.
- Backtesting Buy Signal: Focus on the long signal for backtesting (not short).
- Editing the Code: Copy the part of the code where the Buy Signal is and plot it with a title for future reference.
- Adding to Chart: Remove the original RMI, replacing it with the edited version.
Using Risk to Reward Optimizer
- Adding the Optimizer: Add “Risk to Reward Optimizer” by Shter Prime to your chart.
- Entry Type Setup: In settings, choose “external” and select the RMI Buy signal from the edited RMI version.
- Input External Value: Ensure external value is set to 1.
- Testing Different Ratios: Set up and test different risk-to-reward ratios (1:1, 1.5:1, 2:1, etc).
Analysis of Results
- Optimizer shows total trades, wins, losses, win rate, profit factor, and P&L.
- Determining the best risk-to-reward ratio involves checking these metrics.
- Adjustment of stop settings (e.g., ATR settings) impacts results.
- Example: Using ATR with 1.5 factor, a ratio of 2:1 gives a 180% P&L on a 10K capital.
Adjustments and Optimization
- Adjust RMI settings to try different values and improve P&L.
- RMI settings tested: e.g., 66/33, 35, 10 above/below values for optimization.
- Change timeframes (e.g., 2 hours to 1 hour) to see the impact.
- Examples show significant differences in returns with different settings.
Final Thoughts
- Create strategies using RMI and optimize stoploss with ATR for best P&L.
- Continually adjust the values for risk ratio and RMI settings to find what works best.
- This methodology is not exclusive to RMI; applicable to any long condition in various indicators.
- Key takeaway: Trade with risk ratios to cover losses and ensure profitability.
Summary
- Detailed process involving adding indicators, editing code, backtesting signals, and using optimization tools.
- Importance of risk-to-reward ratios and settings optimization.
- Indicative results and adjustments needed for the best outcomes.
Conclusion
- Emphasis on not gambling but systematically trading with a solid strategy.
- Call to action: Experiment with the settings and optimize for best results.
Note: Utilize comments and community for progress and feedback.