Grey1
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The chart below shows the RSI with three different settings as follow..
RSI of 8 period back
RSI of 13 period back
RSI of 21 Period back
Two lines are also drawn at 80 and 20 showing both extremes
The instrument is OB if all three RSI's are at 80 and TURNING
The instrument is OS if all three RSI 's are at 20 and TURNING
The three different time frame is called FIB PEAK and are meant to capture the 3,8 and 21 period cycle..
I have chosen a trending chart to show a point as Oscillators give false signals in trending mode.. My point is an oscillator can also be used effectively should the instrument trend..
Strategy 1)
1)Night before :--choose two instruments ( use daily chart) one Over sold ( SAY STOCK X) and the other Over bought ( STOCK Y) defined as above,, except that NONE of them are TURNING
2)Trading day :-- Let market open and wait 30 minutes
3) watch to see if Stock X is rising (No point to predict .. we are not GOD we just follow the market action) and Stock Y falling ( for the same reason )
4) Divide the price of stock X by Stock Y and bet the a proportional amount of these two stocks against each other .. Hedge one against the other
Strategy 2)
1) night before.. short list those stocks which satisfy the above criteria ( daily chart)
2) Trading day .. If market is weak then only chose the OB stock and short the stock ( MAKE SURE THE STCOK IS IN NEGATIVE TERRITORY ) .. Put a money management stop (what you can afford to lose without losing sleep.. This is an ad-hoc MM stop.. you can use martingale or volatility means to allocate your stop ..
3) close your position before market close ( you may change the day trade to swing if you wish ...leave that to your own judgment.. Take the dog for the walk and DO NOT DO ANY MORE ANALYSIS...
Strategy 3) Scalping
1) chart 30 tick
2) wait for above criteria to satisfy ..
3) watch the next bar if it opens strong( lets say we want to go long ) then BUY @ BID and SELL on the third bar on 1 minute chart AT ASK .. you often get filled ..
using this technique we do not really care much where market heads ,, We play the market as it unfolds..
One can add all sorts of modifications to fine tune these strategies.. I use VWAP myself as I have explained in my previous posts but if you want an alternative to your current trading strategy , perhaps you wish to try the above..
This is not a politically back tested, curve fitted, exit optimized JUNK ... It is a strategy which works for day traders..
PS:_- if you are into differential trading you can use the above technique to calculate a MAX historical differential between two indices and take an opposite but PROPORTIANAL position to hedge one index against the other...
PS:- There are other strategies to call the top and bottom using statistical approaches and risk analysis but I have noticed many people are still using RSI hence this post..
RSI of 8 period back
RSI of 13 period back
RSI of 21 Period back
Two lines are also drawn at 80 and 20 showing both extremes
The instrument is OB if all three RSI's are at 80 and TURNING
The instrument is OS if all three RSI 's are at 20 and TURNING
The three different time frame is called FIB PEAK and are meant to capture the 3,8 and 21 period cycle..
I have chosen a trending chart to show a point as Oscillators give false signals in trending mode.. My point is an oscillator can also be used effectively should the instrument trend..
Strategy 1)
1)Night before :--choose two instruments ( use daily chart) one Over sold ( SAY STOCK X) and the other Over bought ( STOCK Y) defined as above,, except that NONE of them are TURNING
2)Trading day :-- Let market open and wait 30 minutes
3) watch to see if Stock X is rising (No point to predict .. we are not GOD we just follow the market action) and Stock Y falling ( for the same reason )
4) Divide the price of stock X by Stock Y and bet the a proportional amount of these two stocks against each other .. Hedge one against the other
Strategy 2)
1) night before.. short list those stocks which satisfy the above criteria ( daily chart)
2) Trading day .. If market is weak then only chose the OB stock and short the stock ( MAKE SURE THE STCOK IS IN NEGATIVE TERRITORY ) .. Put a money management stop (what you can afford to lose without losing sleep.. This is an ad-hoc MM stop.. you can use martingale or volatility means to allocate your stop ..
3) close your position before market close ( you may change the day trade to swing if you wish ...leave that to your own judgment.. Take the dog for the walk and DO NOT DO ANY MORE ANALYSIS...
Strategy 3) Scalping
1) chart 30 tick
2) wait for above criteria to satisfy ..
3) watch the next bar if it opens strong( lets say we want to go long ) then BUY @ BID and SELL on the third bar on 1 minute chart AT ASK .. you often get filled ..
using this technique we do not really care much where market heads ,, We play the market as it unfolds..
One can add all sorts of modifications to fine tune these strategies.. I use VWAP myself as I have explained in my previous posts but if you want an alternative to your current trading strategy , perhaps you wish to try the above..
This is not a politically back tested, curve fitted, exit optimized JUNK ... It is a strategy which works for day traders..
PS:_- if you are into differential trading you can use the above technique to calculate a MAX historical differential between two indices and take an opposite but PROPORTIANAL position to hedge one index against the other...
PS:- There are other strategies to call the top and bottom using statistical approaches and risk analysis but I have noticed many people are still using RSI hence this post..
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