RSI Red Legs
Starts buying when a market is oversold, adds a leg on every red day, and sells the whole ladder as soon as a small profit is in.
- Markets
- 20 large coins and the Nasdaq-100 (QQQ), futures
- Chart
- Daily candles
- Direction
- Long only
- Leverage
- 2x on coins, 3x on QQQ
- Positions
- Up to five equal legs each
- Live since
- 18 September 2026
- First leg: the short-term RSI closes deep in oversold territory, and the first of five equal legs is bought.
- Red days add legs: while the position is open, every day that closes below its open adds one more leg.
- Average and target: the dashed line is the average entry price, the gold line the profit target just above it. Both move down with each leg.
- Exit: price touches the target during the day, and the whole ladder is sold at once.
- Legs in use: how much of the five-leg budget is invested.
The idea
Dips rarely end on the first red day. A sell-off often runs for several days, and trying to pick the exact low is a guessing game. This strategy does not guess. It starts small when a market first looks oversold and keeps adding as long as the selling continues, so the average price falls with every leg.
Because the average keeps moving down, a modest bounce is enough to turn the whole position into a profit. The strategy does not wait for a full recovery: it sells everything as soon as a small, fixed profit over the average is reached, often during the day. The same logic runs on a set of large coins and on the Nasdaq-100, through QQQ.
How it trades
Every dip follows the same ladder, built at the daily close:
Healthy market
For coins, a ladder may only start while price is above its long-term average and the trend is still rising. QQQ trades without this check.
First leg
The short-term RSI closes deep in oversold territory. The first of five equal legs is bought.
Red days add legs
Every following day that closes below its open adds one more leg, up to five. Green days add nothing.
Target
A sell order sits just above the average entry price and moves down with every new leg.
Sell the bounce
When price touches the target, the whole ladder is sold at once. A strong rebound in the short-term RSI closes it at the daily close as well.
Flat again, the strategy waits for the next dip.
The trend check only decides whether a ladder may start. Once it runs, legs are added on red days whatever the trend does.
When it sells
Profit target
A fixed small profit over the average entry price. The order waits in the market, so it can fill at any time of day, not only at the close. On QQQ the target is smaller, because the index moves less than coins.
RSI recovery
If the short-term RSI recovers strongly before the target is hit, the ladder is closed at the daily close.
No stop-loss
There is no stop. Risk is limited by the five-leg budget: a ladder never invests more than its fixed slot, however long the sell-off lasts.
Risk
- Leverage of 2x on coins and 3x on QQQ, which the index’s lower volatility allows. Every position uses isolated margin, so a single trade can never draw on the rest of the account.
- Each ladder has a fixed budget split into five equal legs, so the position never grows beyond its slot.
- When many ladders run at once and the free margin runs short, further legs are refused. Open positions are not affected.
- The trend check keeps coin ladders out of falling markets, so most sell-offs that start in a bear market are skipped.
- No stop-loss. A sell-off that keeps going after all five legs are in is held until it bounces.
Where it does well, and where it struggles
Does well in
- Rising markets with frequent short dips, which give many small, quick wins.
- Sell-offs that run for several days and then bounce: the ladder buys more as the price falls and needs only a small rebound.
Struggles in
- Long, steady declines after all legs are in, where the bounce does not come for a long time.
- Sharp crashes, which fill the whole ladder in a few days at prices that keep falling.
- Strong, uninterrupted rallies, where few dips are deep enough to start a ladder.
Backtest
How the strategy would have traded since 2018, with the same rules, limits and leverage as live.
Mar 2018 to Oct 2026. Coins: the 30 largest by market value at the start of each year. Up to eight ladders of five legs, 2x leverage. Starting balance $10,000, profits reinvested, fees included.
- Average return per year
- +24%
- Worst drawdown
- −34% −20% on closed trades
- Trades
- 1,240 About 2 days each, typically
- Winning trades
- 91% Profit factor 2.4
Including open trades at their lowest pointClosed trades only
| Year | Return | Worst drawdown |
|---|---|---|
| 2018 part | 0% | −3% |
| 2019 | +8% | −25% |
| 2020 | +51% | −19% |
| 2021 | +96% | −23% |
| 2022 | −9% | −16% |
| 2023 | +9% | −34% |
| 2024 | +32% | −31% |
| 2025 | +27% | −17% |
| 2026 to Oct | +20% | −9% |
In the backtest, 4 positions were liquidated, losing the margin set aside for them. Both curves include these losses.
Feb 2018 to Oct 2026. QQQ, one ladder of five legs, 3x leverage. Starting balance $10,000, profits reinvested, fees included.
- Average return per year
- +16%
- Worst drawdown
- −29% −19% on closed trades
- Trades
- 171 About 5 days each, typically
- Winning trades
- 90% Profit factor 2.4
Including open trades at their lowest pointClosed trades only
| Year | Return | Worst drawdown |
|---|---|---|
| 2018 part | −8% | −27% |
| 2019 | +13% | −19% |
| 2020 | +30% | −27% |
| 2021 | +34% | −11% |
| 2022 | +13% | −26% |
| 2023 | +4% | −22% |
| 2024 | +20% | −16% |
| 2025 | +16% | −29% |
| 2026 to Oct | +22% | −17% |
Hypothetical results from a simulation on historical data, not live trading. Live results differ, and past performance is no guarantee of future results. How the backtests were made