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The RSI Trade

  • #861
  • Feb 19, 2011 1:45pm Feb 19, 2011 1:45pm
Hello Kareem40,

Interesting system, can you tell me which peaks/troughs you decide to take for your trendline. The reason I ask is because sometimes there are earlier peaks which you ignore for your trend line which may have got you in earlier if you had used them.

I can would be so kind as to explain that would be helpful for me to make my decisions.

Dave
  • #862
  • Feb 20, 2011 7:05am Feb 20, 2011 7:05am
Quoting Dave1
Hello Kareem40,

Interesting system, can you tell me which peaks/troughs you decide to take for your trendline. The reason I ask is because sometimes there are earlier peaks which you ignore for your trend line which may have got you in earlier if you had used them.

I can would be so kind as to explain that would be helpful for me to make my decisions.

Dave
Hi Dave,
When I traded shorter time frames ( such as 5M) I wanted to get as many peaks as possible, not just the first one. Now with the 1H/4H charts I start the trend line after the first peak. Please note trendlines drawing is and can be an art, so different people tend to draw them differently. I will post some charts next week.
Kareem
Trade Garlic
  • #863
  • Feb 21, 2011 5:11pm Feb 21, 2011 5:11pm
Hi Kareem and Others,

I noticed that you use this system for trading both trend, counter-trend and ranges. Has anyone tested this system using it only as a trend following system by only trading in the direction of the upper timeframe trend.

Sharon
  • #864
  • Feb 22, 2011 4:02am Feb 22, 2011 4:02am
Hi Sharon,
The RSI can be used as a trend following system, where you are quite happy to give back a sizable portion of your profit in exchange for the possibility of hitting a much larger return than if you were just using it to trade an individual move or whatever

For an uptrend:
A trend can start from a trend reversal i.e RSI passing up thro 40 level
A trend can start from consolidation i.e. RSI has been trading between 40 and 60 - and breaks out above 60
or
We can have a trend continuation where the trace either passes up thro 60 or rebounds back up of the 40 level
The trend has not reverted to a downtrend until it falls below 40

Use the opposite for a downtrend

Its always nice when your RSI signal breaks a trendline drawn thro the relevant RSI peaks or troughs

Its nice to see that you use multiple timeframe analysis, as I have found them to be so important in defining the structure of the market and therefore the trade potential

As regards testing - this is something that is best done by the person who is considering using the "system"

NEVER take as gospel ANYTHING that you read on any forum, you must check it out for yourself - and be comfortable with the experience

You will probably add the odd filter which you have found useful in the past
But you should try to keep it as simple as possible - we all tend to complicate things (our filters tend to creep in more and more over time, if we are not careful)

Hope this helps
Peter
  • #865
  • Feb 22, 2011 5:03am Feb 22, 2011 5:03am
Quoting lizpet

You will probably add the odd filter which you have found useful in the past
But you should try to keep it as simple as possible - we all tend to complicate things (our filters tend to creep in more and more over time, if we are not careful)
Hi Peter,
Thanks for your detailed answer. You've given me a few things to think about. I started testing this system just today after spending the past few weeks researching ways to filter this system. Apart from trading only in the upper time frame direction, I could not come up with any other filters. I was pleasantly surprised with the performance of this system today (without any extra filters). Early days yet, but I think I may finally have settled on a simple yet powerful system which I feel really comfortable trading.

Many thanks to you, Kareem and all the others who have contributed to this thread.

Happy trading
Sharon
  • #866
  • Feb 22, 2011 6:04am Feb 22, 2011 6:04am
Hi Sharon,
The RSI is pretty powerful when used "correctly", and does not lag as so many gurus say!.

Anyway, if you have checked out the RSI S/R levels and find that they work for you - then multiple timeframe trading becomes that more meaningful

As an example, if we use say the monthly, weekly and daily charts i.e. then the daily bars are the building blocks of the weekly and the weekly bars are the building blocks of the monthly. Get these all lined up and your odds of a winning trade are greatly increased

So for an upmove:
We would look for a trade setup on the weekly
Check the monthly to ensure that there is no nearby overhead resistance, or the trace is not at an extreme, or the trace is not showing signs of the trend weakening
If they check out OK , this gives us the probability of the weekly moving in the "expected" direction (overall)
We then go to the daily for our entry and stop loss points

Example
RSI trace falls to a support level - say 40 on the weekly (we expect this to hold)
Check the monthly to ensure its RSI trace is not at an extreme i.e. >80 (in some really strong moves the RSI trace can stay above 80 for some time, but this is the exception, not the rule), check that it is not giving a bearish divergence with price or is not approaching a RSI resistance level - if all is well, then go to the daily and look for an entry e.g. RSI trace passing up thro 40 or 60 or rebounding of support.

There you go - something else to think about

I'm going back into hibernation

Sharon the RSI is really very good, it works well with the MACD (12,26,1), just use the MACD trace turning up or down as signals - gets rid of the noise and keeps you in the trade without getting turfed out on false signals
Another useful indicator is the Stoch (5,3,3) use this to locate divergence on the RSI (I'm sure you can work it out)

Well thats my contribution for another year
Keep smiling
Peter
  • #867
  • Feb 22, 2011 1:55pm Feb 22, 2011 1:55pm
Thank you Kareem, look forward to seeing your charts.
  • #868
  • Feb 23, 2011 6:42am Feb 23, 2011 6:42am
Quoting lizpet
Hi Sharon,
The RSI is pretty powerful when used "correctly", and does not lag as so many gurus say!.

Anyway, if you have checked out the RSI S/R levels and find that they work for you - then multiple timeframe trading becomes that more meaningful

As an example, if we use say the monthly, weekly and daily charts i.e. then the daily bars are the building blocks of the weekly and the weekly bars are the building blocks of the monthly. Get these all lined up and your odds of a winning trade are greatly increased

So for an upmove:
We would look...
Hi Peter,
Thank you for the post. Nice to hear from you again.
Kareem
Trade Garlic
  • #869
  • Feb 23, 2011 6:44am Feb 23, 2011 6:44am
Quoting gembug123
Hi Peter,
Thanks for your detailed answer. You've given me a few things to think about. I started testing this system just today after spending the past few weeks researching ways to filter this system. Apart from trading only in the upper time frame direction, I could not come up with any other filters. I was pleasantly surprised with the performance of this system today (without any extra filters). Early days yet, but I think I may finally have settled on a simple yet powerful system which I feel really comfortable trading.

Many thanks to you,...
Hi Sharon,
Thank you for the post. I wish you the best in your new system and please feel free to share any charts in the near future. I will start posting again soon.
Trade Garlic
  • #870
  • Feb 23, 2011 7:59pm Feb 23, 2011 7:59pm
Quoting lizpet
Hi Sharon,

Sharon the RSI is really very good, it works well with the MACD (12,26,1), just use the MACD trace turning up or down as signals - gets rid of the noise and keeps you in the trade without getting turfed out on false signals
Another useful indicator is the Stoch (5,3,3) use this to locate divergence on the RSI (I'm sure you can work it out)
Peter,
Thanks for more of your insights. Haven't had much time the last day or so. Will check out this system combined with MACD/Stoch as you've suggested.
Thanks Again for your help.
Sharon
  • #871
  • Feb 23, 2011 8:01pm Feb 23, 2011 8:01pm
Quoting kareem40
Hi Sharon,
Thank you for the post. I wish you the best in your new system and please feel free to share any charts in the near future. I will start posting again soon.
Hi Kareem,

Thanks for your post. Will try out this system for a full week next week and let you know how I go.

Thanks,
Sharon
  • #872
  • Jul 30, 2011 8:07am Jul 30, 2011 8:07am
Hi,

I created an indicator that displays RSI trendline. It may be useful for this strategy. It is the default MT4 RSI indicator but with an added trendline. the second parameter "TL_bars" may be 1 or 2, it is the count of how many bars define a swing high/low of a trendline. you may see the difference on the example attached. in my opinion 2 is better.

It seems to be a quite good confirmation method using RSI 14 or 21.


regards,
Gyula
Attached Image (click to enlarge)
Click to Enlarge Name: rsi-tl.gif Size: 14 KB
Attached File(s)
File Type: mq4 RSI-TL.mq4   6 KB | 3,101 downloads
  • #873
  • Jul 31, 2011 8:31am Jul 31, 2011 8:31am
This is great. Thank you much Gyula. I will install and watch. for the past year I have been using this set up on higher time frame. Mostly 1 and 4H charts.
Kareem
Trade Garlic
  • #874
  • Jul 31, 2011 9:40am Jul 31, 2011 9:40am
Great job Szgy74

Thanks for sharing it!




Quoting szgy74
Hi,

I created an indicator that displays RSI trendline. It may be useful for this strategy. It is the default MT4 RSI indicator but with an added trendline. the second parameter "TL_bars" may be 1 or 2, it is the count of how many bars define a swing high/low of a trendline. you may see the difference on the example attached. in my opinion 2 is better.

It seems to be a quite good confirmation method using RSI 14 or 21.


regards,
Gyula
  • #875
  • Aug 1, 2011 3:10am Aug 1, 2011 3:10am
Hi Kareem/ Gyula,
Here's an application that may be of interest, that makes use of the RSI trendline to enter a new trend.....

A great way to use the RSI trendline is to use it to identify price /RSI divergence

Looking for bearish divergence in the RSI (9) 80 level zone, and bullish divergence in the RSI(9) 20 level zone

Application
Entry
If the 1st two pivot peaks/troughs through which the RSI trendline is drawn - show a divergence with price - then enter on the next bar.
Exit
Break of the RSI trendline, if the trend accelerates you could consider an exit before price breaks the TL or use whatever your trading plan says.Maybe consider exiting on the trace of the MACD (12.26.1) when it goes flat or turns over, or maybe a candlestick reversal sig. etc etc etc

Trade Logic
If the RSI trace is in the 20 or 80 zone, then there is a trend in place
The accurance of divergence indicates weakness in the existing move - so the probability of trend reversal, and new trend is more likely
If the 2nd pivot is a candlestick reversal bar or part of a reversal signal - so much the better
Our RSI entry levels will be in the 20 or 80 zones, and these are zones where trend reversals tend to occur, so we will be getting in at the start of a possible new trend

There you go - something to experiment with

Peter
  • #876
  • Aug 1, 2011 7:20am Aug 1, 2011 7:20am
Quoting lizpet
Hi Kareem/ Gyula,
Here's an application that may be of interest, that makes use of the RSI trendline to enter a new trend.....

A great way to use the RSI trendline is to use it to identify price /RSI divergence

Looking for bearish divergence in the RSI (9) 80 level zone, and bullish divergence in the RSI(9) 20 level zone

Application
Entry
If the 1st two pivot peaks/troughs through which the RSI trendline is drawn - show a divergence with price - then enter on the next bar.
Exit
Break of the RSI trendline, if the trend accelerates you could...
Interesting and informative as always Peter. Nice to hear from you. I will watch the set up.
Thank you,
Kareem
Trade Garlic
  • #877
  • Apr 24, 2012 7:57am Apr 24, 2012 7:57am
Here is a trade I am still holding. It broke a long tredline, so it should move some.
Attached Image (click to enlarge)
Click to Enlarge Name: gbpusd1.jpg Size: 171 KB
Trade Garlic
  • #878
  • Edited 1:33pm Aug 16, 2012 6:29am | Edited 1:33pm
Quoting kareem40
By the way, I have invited Mr. Seyedinajad to our forum. He is the trader who first wrote about this set up. I hope to hear from him soon.
Kareem
I want to know more about RSI, Can you help me? professor Kareem40...
  • #879
  • Aug 22, 2012 6:53am Aug 22, 2012 6:53am
Quoting fooloo_1973
I want to know more about RSI, Can you help me? professor Kareem40...
Hi
Sorry for the late reply. I no longer trade with the RSI method. It has been effective, but I have found a new trading method with even better results. I will do my best to start a new thread for my new trading method.
Thanks
Trade Garlic
  • #880
  • Aug 22, 2012 7:25am Aug 22, 2012 7:25am
Hojam,,, can you explain me about your new method ? (Please.......)
I respect all of your researches...........it's two years that i'm follow your perfect methods.............Thanks again, Sincerely yours...
Tesekurler !
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