Mean reversion trading

Hello,

I use this setfile for mean reversion trading on gbpusd. mean reversion set file.set

It gets into positions on rsi overextensions on h1 or h4.  

Adding on positions and take profit is based on a factor of ADR for the pair (in this case GBPUSD). A reasonable risk should be 1000 usd/euro for every pair. Set file will work mostly with 2-3 positions but I have noticed that 2-3 times a year the pair will go into a squeeze and one should have enough margin for that.

I use 0.5 ADR for take profit and 0.75 for extra positions.

There is no stoploss. 

I haven't figured out how to close positions the way I would like to with this EA but this set file is useful nonetheless. 

Things one can change to use for different pairs.

RSI timeframe = h1 or h4 (more signals but less accurate on h1 as compared to more accurate but less signals on h4)

RSI overexension limits = I use 75/25 for middle ground but one can play with these to one's liking

Lot size = currently I use 0.01 but one should think of breaking down one's risk into 3-4 parts as the ea will usually go into 2-3 positions

ADR number = currently I use 10

Take profit factor = currently I use 0.5 (this varies a lot across different pairs, so one should change it and test it)

Adding on positions (martingale)= 0.75 (this also varies a bit across different pairs, i have seen some pairs are better with 1 while some work better with 0.5)

Adding on positions lot size multiplicator = currently I use 1.3

Partial close/drawdown control (really important)= set it up according to your liking 

As a trader I am learning to be flexible, which is knowing when to go in with extra positions and when to cut them down. 

Mean reversion trading can(should) be combined with trend trading or breakout trading approaches to reduce the risk/drawdown size, or as a part of portfolio of other strategies to reduce drawdown. The bigger picture is that an instrument will trend, range, or mean revert so one should have a portfolio of these strategies to negate their individual drawdowns. 

Hope the set file is useful for people who might like to try mean reversion trading. 

Cheers

Asad