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The RSI Trade

  • #461
  • Aug 11, 2009 2:51pm Aug 11, 2009 2:51pm
Quoting pdean123
I have read through most of the posts here. The problem that you are all having is that you do not understand Reversals and Continuations signals on the RSI. I will explain and try to keep it brief but would be glad to answer your questions.

Wilder did not realize there were reversal signals when he designed the RSI. He wasn't looking for that.
Andrew Cardwell, his student, discovered them.
Hayden worked with Cardwell but really does not completely understand the use of RSI (at least from reading his book). I think Cardwell would agree.
Constance...

Thanks for letting us know how little we understand. A good way to gain trust and respect in a new thread is not by calling us all thick.
I personally have no desire to learn anything from anyone pedalling their system in here.
If you wish to help then why feel the need to advertise your commercial products in your signature. Just give the info and sign off as Paul.
You have already ended up in trouble in for same thing and that thread you started got binned.
A quick search reveals a system for several hundred dollars will fix our problem and surprise you wrote it.
There is a commercial thread for this stuff now so jog on over there before you get kareems thread binned.

By the way Twee knows.

edit; I notice that you don't sign off the same in the j16 thread, probably due to being pulled up for it before.
  • #462
  • Aug 11, 2009 3:11pm Aug 11, 2009 3:11pm
LOL Andy there looking a door man at my local are you free for weekend work..

Danny
  • #463
  • Aug 11, 2009 3:25pm Aug 11, 2009 3:25pm
How much and where is it.
Hi rebelheart. I don't mind the guy offering his knowledge but to say none of us get it winds me up. I get it enough to earn some but even if i was minted I wouldn't pay $699 just for him to relabel patterns and sell them off as his own.
Now about this job, Will it involve free cider and where are you in uk. It needs to be close to bristol
Andy
  • #464
  • Aug 11, 2009 4:05pm Aug 11, 2009 4:05pm
Sorry, it was not my intent to sell anything. The only reason I signed my name was that someone had mentioned in an earlier post my website and I wanted to authenticate that I was that person. Rather than post my website I posted my books.

It probably wouldn't matter how I said it or what I said because that is how many of these forums are. Everyone gets so defensive. I have spent years researching this and have spoken with Andrew Cardwell often. He is respectively regarded as the leading person on RSI. He is aware of my website and has reviewed my book. You couldn't know what is in it and it's value if you haven't read it.

I have a great deal of interest in RSI. Incidentally I became aware of this forum by seeing that many members had come to my site of which I am appreciative and I thought it would be helpful to you to have someone that has spent so much time researching RSI.

I apologize and will no longer waste your time.
Paul
  • #465
  • Aug 11, 2009 4:07pm Aug 11, 2009 4:07pm
Quoting andypips
Thanks for letting us know how little we understand. A good way to gain trust and respect in a new thread is not by calling us all thick.
I personally have no desire to learn anything from anyone pedalling their system in here.
If you wish to help then why feel the need to advertise your commercial products in your signature. Just give the info and sign off as Paul.
You have already ended up in trouble in for same thing and that thread you started got binned.
A quick search reveals a system for several hundred dollars will fix our problem and surprise...
More to the point: Are you aware what Andrew Cardwell refers to as reversals? If you don't or aren't interested then you are missing one of the strongest signals that RSI has to offer.
paul
  • #466
  • Aug 11, 2009 4:11pm Aug 11, 2009 4:11pm
Quoting andypips
How much and where is it.
Hi rebelheart. I don't mind the guy offering his knowledge but to say none of us get it winds me up. I get it enough to earn some but even if i was minted I wouldn't pay $699 just for him to relabel patterns and sell them off as his own.
Now about this job, Will it involve free cider and where are you in uk. It needs to be close to bristol
Andy
I never said no one gets it. My post was just saying that after reading the entire post there were things people did not understand. I didn't ask anyone to buy my book. I only used the name to authenticate who I was in reference to an earlier post. My trading process is not "relabeled patterns" as I do not know what that means. There are significant points on RSI that after reading the forum posts it appeared the traders here were unaware of.
  • #467
  • Aug 11, 2009 4:49pm Aug 11, 2009 4:49pm
Quoting lizpet
Don't know whats come over me, all this posting. Put it down to idle hands and too much spare time!

Anyway here's another thought for to-day

This is only my opinion

Why does S/R work - they are psychological levels that we humans tend to gravitate towards

I can understand why this is so with Price S/R, but don't quite get it with RSI S/R - but they work for me and thats all that matters
Where is the logic in Fibonacci levels? they also work for some of us

The beauty of RSI S/R is that the levels are set - we have no input other than...
One of the things that RSI does is key into momentum in the market. That is the major function. When you trade RSI you look for these momentum changes in what are called reversals or continuations. These are not the same as divergences. Most divergences lead to the opposite result. In other words most negative or bearish divergences lead to higher prices. In the chart I provided, price on the AUDUSD climbed almost 500 pips. All of the purple dashed lines are negative divergences that actually force price higher as they are small retracements, some so insignificant that they can create many losses to traders thinking price has reversed.

Understanding this one fact can save you lots of money. Divergences are pre-signals that momentum is getting ready to make another thrust in the opposite direction (most of the time).

That is the confusion with trying to say that RSI is overbought at 70 and oversold at 30. You can find places where this is true but you find many places where price stays overbought for long periods of time.

Once the real signal has formed the next step is simple price action determination. Is the continuation signal confirmed by buyers and sellers in the market? There is no need to read candlesticks. What you are doing as a retail trader is making an attempt to understand where institutional traders are beginning to place their orders. They do not dump the whole load at once. They also defend price positions which is the reason you see support and resistance.

One way to monitor momentum in the entire market is have a way that momentum signals can alert you on every time frame. You can do this (manually) on a number of pairs in one time frame, say 12 and when more than half are giving the same signal in the same time frame you know that something is happening. Now if you multiply that to include the 15 minute and the hourly then you will get a earlier warning.

I hope this makes sense. I would be happy to articulate an areas that seem unclear. There is much more when it comes to RSI.
Attached Image (click to enlarge)
Click to Enlarge Name: AUDUSD.jpg Size: 192 KB
  • #468
  • Aug 11, 2009 4:57pm Aug 11, 2009 4:57pm
I noticed reference to channels on RSI. Below is the AUDUSD. RSI is read in slanted channels. The arrow locations shows where RSI momentum accelerates into the next level in these descending channels. If RSI were to stay in one of these channels and not move to the next then a "true" reversal or Range Shift would occur and the channels would change direction and move into ascending channels.
Attached Image (click to enlarge)
Click to Enlarge Name: AUDUSD 2.jpg Size: 202 KB
  • #469
  • Aug 11, 2009 6:11pm Aug 11, 2009 6:11pm
Quoting pdean123
More to the point: Are you aware what Andrew Cardwell refers to as reversals? If you don't or aren't interested then you are missing one of the strongest signals that RSI has to offer.
paul
I would like to know what the strongest RSI reversal signal is, if you would like to share and/or post a chart.

AZ
I found the guy who keeps losing me money. Its "ME" SHOOT HIM!
  • #470
  • Aug 11, 2009 6:28pm Aug 11, 2009 6:28pm
Quoting AZ-Heat
I would like to know what the strongest RSI reversal signal is, if you would like to share and/or post a chart.

AZ
There are two. Positive and Negative Reversals. The Positive Reversal has a lower RSI value at the second point and a higher price. The Negative Reversal has a higher RSI value and a lower price. If you look at the chart preceding this post, the Negative Reversals are in the Red and the Positive are green.

Cardwell defined these as reversals and out of respect for his discovery I refer to them by that as well. However, they do not reverse the trend, they are signals that accelerate the trend or continue it. I prefer continuations.
An example of this is on the daily chart of the EURUSD in late July of 2008 price dropped 2000 points before the first daily reversal appeared. Price then dropped another 2400 points where a cycle of continued positive divergences drove price up again.

At the moment a wedge of positive and negative divergences is forming and is in the upper range that is appropriate for bullish trends. If one was trading the hourly, they would look for reversals that favored that possibility.


Paul
  • #471
  • Aug 11, 2009 8:50pm Aug 11, 2009 8:50pm
Quoting pdean123
There are two. Positive and Negative Reversals. The Positive Reversal has a lower RSI value at the second point and a higher price. The Negative Reversal has a higher RSI value and a lower price. If you look at the chart preceding this post, the Negative Reversals are in the Red and the Positive are green.

Paul
Thanks for taking the time to type it out for me. To me there seems that this style could leave alot of gray areas for interpretation. I like my charts to be alittle cleaner with less confusion "KISS". It may work for you and great, but I trade more like you stated before with using channels. If RSI has not crossed the channel/trend line, no trade.

Thanks for sharing,

AZ
I found the guy who keeps losing me money. Its "ME" SHOOT HIM!
  • #472
  • Aug 11, 2009 8:57pm Aug 11, 2009 8:57pm
RSI chart
Attached Image (click to enlarge)
Click to Enlarge Name: RSI 8-11.gif Size: 31 KB
I found the guy who keeps losing me money. Its "ME" SHOOT HIM!
  • #473
  • Aug 12, 2009 4:31am Aug 12, 2009 4:31am
Quoting AZ-Heat
Thanks for taking the time to type it out for me. To me there seems that this style could leave alot of gray areas for interpretation. I like my charts to be alittle cleaner with less confusion "KISS". It may work for you and great, but I trade more like you stated before with using channels. If RSI has not crossed the channel/trend line, no trade.

Thanks for sharing,

AZ
Your channels are actually pretty good from the chart you have drawn. Not exactly like Baeyens proposes but effective. I think Baeyens helps the discussion about RSI but I am not sure I totally agree with his method of drawing them. From the chart that you are showing the RSI momentum is narrowing at this point to where some kind of break should occur.
  • #474
  • Aug 12, 2009 8:32am Aug 12, 2009 8:32am
Are you refering to Cardwell's Momentum Discrepancy Reversal Points (MDRP)?

Some call this hidden divergence. I have found discrepancies in what some call hidden divergence. But what I have researched, they are basically the same thing. Please let me know if you have a different understanding.

Basically Cardwell's MDRP is a trend continuing confirmation, e.g. if you have an uptrend and your price gives higher lows and your RSI gives you lower lows this is what Cardwell refers to as MDRP. I have always recognized this as hidden divergence. I might be using the term hidden divergence in error but I have researched several sources and I think that Cardwell's (MDRP and hidden divergence are the same thing. I have only a limited study with RSI so I might be wrong, but this is my understanding.

I do think that the above is more powerful than regular divergence at tops and bottoms.

thanks,
Tarco
  • #475
  • Aug 12, 2009 9:00am Aug 12, 2009 9:00am
Quoting tarco
Are you refering to Cardwell's Momentum Discrepancy Reversal Points (MDRP)?

Some call this hidden divergence....
Tarco,
Yes from your description it sounds as if you are describing them correctly. Cardwell also refers to them as Positive and Negative Reversals. A negative divergence most commonly will push price into a Positive Reversal and vice versa. These are the power behind understanding RSI.

Once you identify them it is important which signals are best to take. Trading them in the direction of the trend will result in fewer false signals and much better results. In two months of trading the USDCAD with the trend the signals produced over 1200 pips.
Paul
  • #476
  • Aug 12, 2009 10:18am Aug 12, 2009 10:18am
My style on a 1 min chart for 10 pips
Attached Image (click to enlarge)
Click to Enlarge Name: RSI 1 min.gif Size: 20 KB
I found the guy who keeps losing me money. Its "ME" SHOOT HIM!
  • #477
  • Aug 12, 2009 10:22am Aug 12, 2009 10:22am
Set up on EUR/USD 1 min chart, if triggered, going for 10 pips
Attached Image (click to enlarge)
Click to Enlarge Name: RSI 1 min.gif Size: 20 KB
I found the guy who keeps losing me money. Its "ME" SHOOT HIM!
  • #478
  • Aug 12, 2009 10:26am Aug 12, 2009 10:26am
Set up on GBP/USD 5 min chart, if triggered, going for 20 pips
Attached Image (click to enlarge)
Click to Enlarge Name: RSI 5 min.gif Size: 19 KB
I found the guy who keeps losing me money. Its "ME" SHOOT HIM!
  • #479
  • Aug 12, 2009 10:34am Aug 12, 2009 10:34am
EUR/USD 1 min set up has changed, so trade has been scrapped.
I found the guy who keeps losing me money. Its "ME" SHOOT HIM!
  • #480
  • Aug 12, 2009 10:41am Aug 12, 2009 10:41am
EUR/USD -5 min - Will only be looking for a short trade.
But that will be atleast an hour or so before any
form of set up comes.
Attached Image (click to enlarge)
Click to Enlarge Name: RSI EUR 5 min.gif Size: 21 KB
I found the guy who keeps losing me money. Its "ME" SHOOT HIM!
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