The market is indeed complex but if you make a system so complicated with tons of rules, you then start to filter out not just the bad trades but a lot of the potentially good ones too.
This is true, but I never said, that one should use tons of rules or tons of indicators. I just wanted to point out that every little element of your system (including MM) should be adjusted to your strategy so that you can exploit the edge as much as possible. And then it comes down to "being smart" when trading.
I personally use only few indicators, but each of them is watching certain part of market action (relative position, volatility, momentum) and each of them is based on far more advanced math than Stoch or MACD. But that is just me.
If your system is working for you, than all the better!
No offence meant
Bluefish
2. Draw a trendline on the RSI (on all charts, usually considering 1H the most)
(lower slope RSI trendline results in higher accuracy rates)
3. When RSI breaks the trendline with at least one completed bar, the direction is confirmed, the price will follow the RSI direction shortly or after some bars (usually 5-10)
Hi!
So basically you enter on RSI divergence to anticipate a trendline break for price based on RSI ahead of time?
Sounds interesting. Have you looked into using RSI TL retests for a finer entry as opposed to adding another indicator like stochs?
I just use "normal" trendlines + price setups, but I might look into divergence again sometime if it proves worth it for a heads up..might do that if you say it works okay for you..
But why have stochs and BBs in the first place?
And one other thing: it appears this is most useful if the RSI TL break comes BEFORE the actual price breakdown. Do you still trade it if price is also already breaking down and then RSI, i.e. "late"?
Because to me it would seem smartest to ONLY trade it if the RSI breakdown comes BEFORE price starts to fall as well as you can minimize stops for entry there..
Also it appears one can use a descending TL on RSI highs on a descent to spot divergence indicating a coming bounce as well for exits...hmm might monitor this more...
Ah, here's some nice exceptions. Appears that as soon as things start to trend more strongly it's all out the window as trendline drawing becomes fuzzy and even though RSI dips price stays sideways...ach well
TC,
SL
after I was trading based on my system, a friend of mine asked me to teach him technical analysis coz he wants to trade forex, I didn't teach him technical analysis instead I trained him to use my simple system...
Now, he is out of the market, but it was money management that broke him...
...
KISS to death