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RSI vs. Stochastics
- Thread starter Drew07
- Start date
Quote from Drew07:
Which indicator is better to use as an OB/OS indicator when trading the minis intraday? Does anyone use them in conjunction with one another to find entries and exits or do you find its better to use them alone?
Why not StochRSI?
It's Stochastocs applied to RSI.
Williams %R also works fine.
One of the key elements to be aware of when using oscillators, such as the RSI, is the market trend will affect the range of the readings oscillator.
In other words, if the market is strong, the RSI will peak at high levels and turn up just under midrange levels. For example, a 14-bar RSI will peak above 75, but turn up from around 40 during an uptrending market.
On the other hand, if the market is in a downtrend, then the RSI will peak around 60 and bottom around 25. You need a set of rules for an oscillator for up-, down- and trading range markets.
You can read more about this here with an example.
http://www.hartleandflow.com/traderedu/2006/11/the-relative-strength-index-as-a-trend-indicator.html
In other words, if the market is strong, the RSI will peak at high levels and turn up just under midrange levels. For example, a 14-bar RSI will peak above 75, but turn up from around 40 during an uptrending market.
On the other hand, if the market is in a downtrend, then the RSI will peak around 60 and bottom around 25. You need a set of rules for an oscillator for up-, down- and trading range markets.
You can read more about this here with an example.
http://www.hartleandflow.com/traderedu/2006/11/the-relative-strength-index-as-a-trend-indicator.html
Quote from Drew07:
Which indicator is better to use as an OB/OS indicator when trading the minis intraday? Does anyone use them in conjunction with one another to find entries and exits or do you find its better to use them alone?
There is a fundamental difference : The peaks of the various RSIs occur on the same day, even if you use RSI(10) or RSI(50). The peaks of the Stochastic depend on the period selected and will have a significant delay for high period values.