Double deep throat the real pullback

I'm sure you'll create a good system using it - 2RSI catches EVERY market cycle out there, tiny ones, big ones = you just have to refine to create a winning high probability strategy from it

I use it on Monthly charts down to hourly

Welles Wilder created the RSI with a look back period of 14 as he was monitoring half a moon cycle

There's nothing wrong with tweaking an Indicators settings to match the peaks and troughs of a market - the catch is trading every signal, you'll go bust that way, but if you create a well defined trading method with rules, you'll win

I cannot believe so few people have written about this, over the years

Let me pick a random UK share, DAILY time-frame and go back to 2010 and see if we can pick out a profitable trade from that time period - 2 secs:

This is a pretty poor example i'm afraid, as the market was not that liquid and my price data only goes back to 2011! Anyway, you can see my point about trade every turn of the Indicator and you'd go bust, create a meaningful trading method/plan and you can win

(Ignore the random purple trendline - the software has created that and it can't be removed)

Good luck on your trading journey

PS - We'd of never taken the 4th Blue circled trade - the range of the bar was wide - we want normal sized or preferably very narrow



Here's a bonus:

Details on the hourly chart - YOU HAVE TO BE AS CERTAIN on the TREND of the market as possible

In the UK our trading day finishes with a 30 min bar (4.30pm) - so it's often narrow and when that happens with the 2RSI <30% you often get a nice up move, often with a gap, the next morning at the open

In the chart below it has a 75% win rate, take the orange b/e trade as a loss and it moves to 66% win rate - you can see it makes more than 1R averaged out

The main risk of this is that you have to buy in at the prev days CLOSE, you will get gap down opens against you, its just going to happen, but when you get the trend right of the bigger picture daily moves, the play works out nice - but its risky

ma x over rsi 2 +IB set up as an entry point

add to short

out with profits

[quote=Thtpro;14828337]Ietails on the hourly chart - YOU HAVE TO BE AS CERTAIN on the TREND of the market as possible.

I would say be certain,that the 30 sma is above the 200 sma for buy.
Some traders just use the price as only indicator and they are ""certain"" on the trend.

How are you AS CERTAIN on the TREND of the market as possible??

QQQ

AAPL

[quote=Puntacana;14830005] This depends on a few things - Higher Highs and Higher Lows including swing lows, swing highs etc - So the SMA's may NOT be in perfect order, but the swing lows etc might be confirming/suggesting the trend - this allows you to buy pullbacks etc - but it add's to the risk of a failing trade

to be ultra safe - this is the safest

SMA's in PERFECT ORDER + price pullback into SMA's 10 or 20 AND 2RSI <25% AND the perfect order "established"

as price corrects slightly on a HIGHER time frame the order of the SMA's reverses SLIGHTLY, then it re-establishes correct order (study enclosed charts)

60 min chart


Daily & WEEKLY chart of another UK stock

Notice the correction on the DAILY, because of WHAT set up was happening on the WEEKLY chart - This does not happen often on this time-frame, but you can find it - DEC 2022 was the trade - this is as certain as you get





If the trend is rising, then you have to assume its going up, until it stops and then reassess - its IMPOSSIBLE to be 100% certain - IMPOSSIBLE (on the short-term outlook)

That being said - I believe that markets are not random and as such that they follow cycles - I try to see if a market exhibits (they all don't) cyclic behaviour and if they do, then I look to the expected direction of the cycle, then wait for the market to align and then I trade it according to this TREND outlook and other methods I use - This MEANS when you get things right you can TIME the markets turns

The follow pic is the CURRENT cycle for the SP500 Index

Blue line is the SP500 Index - RED line is the cycle composite Index created by many many cycles - the RED line is the DIRECTION expected and can be forecast months/years into the future - as you can see its not 100% accurate, but its a million times better than 99% of traders expectations on market direction and as most traders are mostly always wrong on market direction, I prefer the Index as opposed to traders thoughts for that very reason


This is of a UK stock - Red line is the cycle composite and the blue line is the stock



BUT - most people will not go to the trouble of trying to establish cycles, so just keep it simple and look for perfect order evenly spaced SMA's and then a nice little pull back in price with a narrowish bar along with 2RSI <25% and thats the set-up - see the BRWN example above

I cannot state this clearly enough - you ONLY need 3R per week to make over 100% per year using this method

ALL you have to do is WAIT patiently for the PERFECT set-up to come along - BUT, 99% of traders won't do this, because they are greedy, lack discipline and try to trade all turns (through greed) - this is where the trader fails, they think its the system/method, but really its the traders lack of following rules

You can also use this from 2 Time-frames, BUT again you have to trade it with a bit of "art/form" reading of the chart - not trading every signal!

DAILY USDJPY from the other week/month

TREND in place + PULLBACK + 2RSI <25% = possible bounce of some sort

The DAILY range was average and would result in a biggish entry/stop placement above and below the daily price bar - it WAS still tradeable BUT it was not a narrow range (preferred) bar



So this was forming on the Intra-day time-frame 15 min

We had a TREND, which was perfect then not, lots of "faffing" of the 2RSI and then OFF

The form reading of the chart was simple:

1. The Higher Time-Frame DAILY chart was in a position to rally to some degree
2. The 15 min chart was BULLISH - RISING higher highs/lows and swing highs/lows
3. The 20 & 30 SMA's were still BULL UP
4. Only the 10 SMA was bearish
5. You'd of made a loss on the 1st 2RSI <25%
6. The 2nd 2RSI <25% resulted in lower price high and low, so you would NOT have been taken into a trade (buying at the high of the set-up bar)
7. The 3rd 2RSI <25% took you into the trade and then off - with rising lows and higher price bars - EASILY recouping the 1st loss

You can on these small time-frame trades trade a breakout of a swing high or even the high of 2 bars back etc (up to you) - to provide a bit of "wiggle" room

I'm aggressive, so I trade the bar high breakout, but depending upon my mood on the day and the months profits so far, I can be less aggressive - so don't feel compelled to trade a set certain way, if you want to give a trade "wiggle" room do so, it will only result in a few R profit lost, nothing major

and then on trade management - again think about it

I entered on the 15 min chart, but I managed the position on the DAILY higher-Time-Frame chart - I got out around 15000 for about a 400 pip move and the initial risk was a handful of pips - I think overall it was something like a 20R move

1. alignment for me is not need it

Trading what you see using a single time.
You saw ""DAILY chart was in a position to rally to some degree"" then you stay just itrading the daily chart for a huge move.
Big move that last several days .

QQQ
OPEN 9:30 EST

You see 15m the SMA x over is to the downside
Daily SMA x over is to the UPside.
There were very good sell signal for qqq 15 m chart without the need for qqq daily chart to agree

AAPL
1M

“precise” short entry

this was a big move

bounce ?
long with stoploss last swing low

GBPUSD
I'm long

qqq
going my way
0ver 900 pipis

Good patience, it is difficult to avoid temptation and cut profits early.

EURAUD D1

GBPCAD D1