This article examines how the RSI indicator works and how to develop an RSI trading strategy. The Relative Strength Index (RSI) was developed by Welles Wilder and first introduced in a magazine called Commodities (now Futures) in June 1978. Wilder published a book in the same year called New Concepts In Technical Trading Systems (he…
The RSI is one of the most popular indicators used in technical analysis. However, most people use it as a mean reversion indicator rather than a momentum indicator. Today, we show you an RSI range-momentum trading strategy. The RSI range-momentum trading strategy uses the RSI as a momentum indicator for identifying uptrends in stocks and…
The Internal Bar Strength indicator (IBS) has worked remarkably well for over two decades. We can only guess why, but the stock market has been highly mean-reverting during this period, and this has, of course, given the IBS a nice tailwind. IBS is simply an indicator where you buy on weakness and sell on strength,…
The Relative Strength Indicator (RSI) is very popular, and for a good reason. Welles Wilder invented RSI in the 1970s, which is now the most used trading indicator. Today we present a new and modified version of an RSI trading strategy: Triple RSI trading strategy. The Triple RSI trading strategy has four variables – three…
RSI is mostly used as a reversal or contrarian indicator. In most stock markets, this has worked really well over the last 30 years. But what if we flip it and use it as a momentum indicator instead to make a RSI momentum strategy? Can we make money that way? We can use RSI as…
There are different ways of performing technical analysis. While some focus on price action, others make use of indicators. Both moving average convergence divergence (MACD) and the relative strength index (RSI) rank among the most popular indicators used in technical analysis and trading. But what is the MACD and RSI strategy? The MACD and RSI…
Does the RSI Indicator work on crypto or Bitcoin? Bitcoin and other cryptos are attracting many traders and new investors, and the crypto daily volume is rising significantly, probably draining resources from the more traditional stock trading arena. The crypto market is a completely new market that is quite different from the traditional equity markets….
Weekly RSI vs daily RSI – what is best? This is a bit like comparing apples to oranges. It might be the same indicator, but RSI can deliver substantially different risk and reward payoffs in different time frames. Risk and reward are matters you can only answer yourself through backtesting. If you are a swing…
Cutler’s RSI including backtest The RSI is a very popular trading indicator among different security traders. But there are other variations of the RSI indicator. One of them is Cutler‘s RSI. You may be wondering what it is, and in this article, we provide you with a description and how it performs in backtests. Cutler’s…
Connors RSI including backtest The traditional RSI indicator has been a great tool for technical analysis and trading, but there have been some efforts by traders to improve it. One such improvement gave rise to the Connors RSI, which can be an invaluable tool for traders when applied correctly — not only does it allow…
Williams %R was developed by the famous trader and tax rebellion Larry Williams, who has given names to several technical indicators. Last week we wrote about the WilliamsVixFix indicator, and today we are explaining the Williams %R trading strategy and how to calculate and use the indicator. Williams %R does work. In this article, we…
High Probability ETF Trading, published in 2009 and written by Larry Connors and Cesar Alvarez, contains some interesting strategies. They are all mean revertive and tested on the most popular ETFs at the time of writing, which was the end of 2008, in the middle of the GFC. Do the strategies covered in the book…
We have previously published an article on using RSI on SPY (relative strength index). The RSI has proven to be a valuable indicator/tool for mean reversion in the main stock indices. Today we present an RSI trading strategy. In this article, we look at how the RSI performs on QQQ – an RSI mean reversion…
Below is a simple and easy trading strategy to implement in SPY or the S&P 500: The classical mean reversion strategy in the S&P 500 In plain English the strategy reads like this: IBS (internal bar strength) must be lower than 0.25 (using daily bars). RSI (21) must be below 45. If 1 and 2…
Below is a simple and easy trading strategy to implement in QQQ: IBS (internal bar strength) must be lower than 0.25. RSI (5) must be below 25. If 1 and 2 are fulfilled, go long at the close. Exit when close is higher than yesterday’s high (you can use higher than yesterday’s close as well…
SPY is very mean revertive and RSI is a mean revertive indicator. Does this mean that RSI works on SPY? In this article, we test an RSI SPY trading strategy. It turns out that our hypothesis is correct: the RSI works well on SPY. Even better, we improve the strategy by adding one extra indicator….
The strategy published in this article has similarities with Larry Connors’ trading strategy called the double 7. Connors’ strategy is very simple with just two rules. The fewer rules, the better, because less probability of curve fitting. The strategy is based on 7 days low (and high for exit), but in my testing, it seems…
S&P 500 has historically a strong tendency to revert to the mean. I’m looking to find a way to fade the gap. My research has indicated that fading the gap is best after a strong move in either direction. Thus: The high and low divergence day trading strategy Here are the criteria for a reasonable…
I guess most traders have heard that “the trend is your friend“. Personally, I don’t do trend-following strategies, I go the opposite way: buy weakness and sell strength – mean reversion strategies. However, this depends on the instrument you trade and of course on the time frame in trading. In general, most currencies and commodities…
Over the last several months I have been looking into a new potential day trading strategy. This one looks into more illiquid stocks and therefore I won’t reveal the strategy: It’s simply not enough volume for many traders to trade the same. So why do I bother to publish it? I would like to show…
