Rahul Mohindar Oscillator also known as RMO is a popular indicator to detect the market direction. It is popular among Metastock traders to trade high volatile instruments. We have tried to design and backtest RMO Trading System in Amibroker. This system is based on a combination of moving averages to predict the price movements. RMO indicator is originally developed by Mr. Rahul Mohindar of based out of India. In addition to being a trader and trainer, Mr. Mohindar is a panelist on both CNBC and CNN India.

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RMO Trading System – AFL Overview

Parameter	Value
Preferred Time-frame	Daily
Indicators Used	Simple Moving Average, Exponential Moving Avrage
Buy Condition	When SwingTrade2 crosses over SwingTrade3 Both SwingTrade2 and SwingTrade3 are constructed using combination of moving averages. SwingTrade2 tracks medium-term trends, while SwingTrade3 tracks long-term trends
Short Condition	When SwingTrade3 crosses over SwingTrade2.
Sell Condition	Same as Short Stop Loss Hit Target met
Cover Condition	Same as Buy Stop Loss Hit Target met
Stop Loss	1%
Targets	5%
Position Size	50% of equity
Initial Equity	200000
Brokerage	100 per order
Margin	10%

RMO Trading System– AFL Code

//------------------------------------------------------
//
//  Formula Name:    RMO Trading System
//  Author/Uploader: Trading Tuitions
//  E-mail:          support@tradingtuitions.com
//  Website:         www.tradingtuitions.com
//------------------------------------------------------

_SECTION_BEGIN("RMO Trading System");

SetBarsRequired( sbrAll );
SetChartOptions(0,chartShowArrows|chartShowDates);
_N(Title = StrFormat("{{NAME}} – {{INTERVAL}} {{DATE}} Open %g, Hi %g, Lo %g, Close %g (%.1f%%) {{VALUES}}", O, H, L, C, SelectedValue( ROC( C, 1 ) ) ));

//Initial Parameters
SetTradeDelays( 1,1,1, 1 );
SetOption( "InitialEquity", 200000);
SetOption("FuturesMode" ,True);
SetOption("MinShares",1);
SetOption("CommissionMode",2);
SetOption("CommissionAmount",100);
SetOption("AccountMargin",10);
SetOption("RefreshWhenCompleted",True);
//SetPositionSize(150,spsShares);
SetPositionSize(50,spsPercentOfEquity);
SetOption( "AllowPositionShrinking", True );

Plot( Close, "Price", colorWhite, styleCandle );

SwingTrd1 = 100 * (Close - ((MA(C,2)+
MA(MA(C,2),2)+
MA(MA(MA(C,2),2),2) +
MA(MA(MA(MA(C,2),2),2),2) +
MA(MA(MA(MA(MA(C,2),2),2),2),2) +
MA(MA(MA(MA(MA(MA(C,2),2),2),2),2),2) +
MA(MA(MA(MA(MA(MA(MA(C,2),2),2),2),2),2),2)+
MA(MA(MA(MA(MA(MA(MA(MA(C,2),2),2),2),2),2),2),2)+
MA(MA(MA(MA(MA(MA(MA(MA(MA(C,2),2),2),2),2),2),2), 2),2)+
MA(MA(MA(MA(MA(MA(MA(MA(MA(MA(C,2),2),2),2),2),2), 2),2),2),2))/10))/(HHV(C,10)-LLV(C,10));
SwingTrd2=EMA(SwingTrd1,30);
SwingTrd3=EMA(SwingTrd2,30);
RMO= EMA(SwingTrd1,81);

Buy=Cross(SwingTrd2,SwingTrd3);
Short=Cross(SwingTrd3,SwingTrd2);
Sell=Short;
Cover=Buy;

BuyPrice=Open;
SellPrice=Open;
ShortPrice=Open;
CoverPrice=Open;

Buy = ExRem(Buy,Sell);
Sell = ExRem(Sell,Buy);
Short=ExRem(Short,Cover);
Cover=ExRem(Cover,Short);

StopLoss=Param("SL",1,1,10,1);
Target=Param("Target",5,5,40,5);
ApplyStop(Type=0,Mode=1,Amount=StopLoss);
ApplyStop(Type=1,Mode=1,Amount=Target);

/* Plot Buy and Sell Signal Arrows */
PlotShapes(IIf(Buy, shapeSquare, shapeNone),colorGreen, 0, L, Offset=-40);
PlotShapes(IIf(Buy, shapeSquare, shapeNone),colorLime, 0,L, Offset=-50);
PlotShapes(IIf(Buy, shapeUpArrow, shapeNone),colorWhite, 0,L, Offset=-45);
PlotShapes(IIf(Cover, shapeSquare, shapeNone),colorGreen, 0, L, Offset=-40);
PlotShapes(IIf(Cover, shapeSquare, shapeNone),colorLime, 0,L, Offset=-50);
PlotShapes(IIf(Cover, shapeUpArrow, shapeNone),colorWhite, 0,L, Offset=-45);
PlotShapes(IIf(Sell, shapeSquare, shapeNone),colorRed, 0, H, Offset=40);
PlotShapes(IIf(Sell, shapeSquare, shapeNone),colorOrange, 0,H, Offset=50);
PlotShapes(IIf(Sell, shapeDownArrow, shapeNone),colorWhite, 0,H, Offset=-45);
PlotShapes(IIf(Short, shapeSquare, shapeNone),colorRed, 0, H, Offset=40);
PlotShapes(IIf(Short, shapeSquare, shapeNone),colorOrange, 0,H, Offset=50);
PlotShapes(IIf(Short, shapeDownArrow, shapeNone),colorWhite, 0,H, Offset=-45);

_SECTION_END();

AFL Screenshot

RMO Trading System- Backtest Report

RMO Trading system has a very good profitability in the last 16 years, but drawdown is also quite high. For an inexperienced trader, it would be hard to digest 11 consecutive losses and less than 30% success ratio.

Parameter	Value
	Nifty
Initial Capital	200000
Final Capital	36656201.64
Scrip Name	NSE Nifty
Backtest Period	30-May-2000 to 12-Jan-2017
Timeframe	Daily
Net Profit %	18228.10% %
Annual Return %	35.78%
Number of Trades	335
Winning Trade %	29.25%
Average holding Period	5.32 periods
Max consecutive losses	11
Max system % drawdown	-70.78%
Max Trade % drawdown	-39.33%

Download the detailed backtest report here.

Equity Curve

The equity curve is very rough and the periods of drawdown is evident. However the overall profitability is good.

Profit Table

Additional Amibroker settings for backtesting

Goto Symbol–>Information, and specify the lot size and margin requirement. The below screenshot shows lot size of 75 and margin requirement of 10% for NSE Nifty:

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