The Actual Grail
- Thread starter Buy1Sell2
- Start date
LOL LOL.
I find it a very sweeping statement to say that the RSI is "some stupid indicator". If you have read the journal by B1S2 you will find that he has been able to use the RSI to a decent level of profitability. The fact is that YOU have not been able to use it therefore you deem it stupid. I knew a guy who always called something stupid when he didnt understand it, basically just as an excuse to cover his lack of insight.
I use RSI but in conjunction with other indicators including price & breadth and several other indicators and I am able to turn a proft with this. Not the 1000% daily you are able to make but my signals are mostly profitable and without the RSI my system would be a lot less consistent.
I appreciate your sharing your "holy grail", but there seems to be a few things missing.
Entering a trade is easy and "yes", I agree that you have a nice entry signal.
Would you mind sharing your
1) stop loss
2) exit
3) money management rules
This might better explain your "holy grail".
Thanks
Entering a trade is easy and "yes", I agree that you have a nice entry signal.
Would you mind sharing your
1) stop loss
2) exit
3) money management rules
This might better explain your "holy grail".
Thanks
Buy1Sell2,
I used a similar strategy at one point. I looked for divergences between price and RSI as well as tags on the bollinger bands. The MACD is a nice touch though. The problems start when price is solid up or solid down.
When price is moving solid in one direction RSI creates a constant set of divergences, so you'll always be looking for a short when the market is moving up and always looking for long when price is moving lower. I suppose you're using MACD to confirm whether or not the divergence marks an entry point?
I agree it would be nice to hear about stops and money management for a "holy grail".
-Hoo_doo
I used a similar strategy at one point. I looked for divergences between price and RSI as well as tags on the bollinger bands. The MACD is a nice touch though. The problems start when price is solid up or solid down.
When price is moving solid in one direction RSI creates a constant set of divergences, so you'll always be looking for a short when the market is moving up and always looking for long when price is moving lower. I suppose you're using MACD to confirm whether or not the divergence marks an entry point?
I agree it would be nice to hear about stops and money management for a "holy grail".
-Hoo_doo
Thanks for the inquiry! Stop losses are kept simple as well--they would be set at a predetermined distance outside reaction highs/lows. Exit are executed either with the trailing stop outside of reaction highs/lows or with a opposite reversal entry signal. Or you can set profit targets, but they must be at least 3 times the stop loss. As far as money management--never lose more than 2 percent of liquid net worth.
I will post a chart of ES yesterday and today on a 15 minute chart and demonstrate. Today had featured this pattern near the Oversold line with a failure swing and you can see what is happening today.
Certainly one must read the RSI signals carefully and correctly. I agree that they will give false positives on strong trends, however it's fairly easy to discern which are real or not by sheer experience looking at them. What the system calls for is to use trailing stops and you defer to those to take you out of a strong winner . Typically for an RSI signal to be taken, I like it to fester in a consolidated area for just a bit and have distance between peaks/troughs. In any event though, your stop loss on a false RSI signal in a strong trend will most likely be very low and it would be key to let that stop loss hit. In answer to your question about using MACD etc. Yes I use that , but the point here is that RSI can be a stand alone system.