RSI And How To Profit From It

About the Author Jeff Swanson

Jeff is the founder of System Trader Success - a website and mission to empowering the retail trader with the proper knowledge and tools to become a profitable trader the world of quantitative/automated trading.

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  • rick says:

    Both strategies look the same to me and there is no cimmulative RSI there, just a regular RSI. Furthermore, 52 trades in 15 years is far from a significant sample.

    • Rick, I just updated the the text file. It was missing the cumulative RSI strategy. Thanks.

  • Worldtrader says:

    Thanks for the simple system. I do use RSI and love them. Rick why don’t you backtest the last 100 years and let us know. 15 years is pretty darn good! Thanks again for sharing!

  • […] by Larry Connors’ Cumulative RSI(2) (found in this post), I decided to test out how a Cumulative DV2 indicator would work. This is a frictionless test […]

  • […] by Larry Connors’ Cumulative RSI(2) (found in this post), and the results of my Cumulative DV2 (found in this post) I decided to test out how a […]

  • curious says:

    After reading your article it left me wondering how $1000 stop-loss ensured when buying at closing price?

    • No stop is ever ensured. This is part of the risk of holding trades when the market is closed.

      • curious says:

        That means that your simulated returns are incorrect and the system is not profitable at all.

        • Can you explain why the simulated returns are not correct and what the true simulated results are based on your runs?

          • curious says:

            Because one can’t control the gap between closing and opening price the simulation you offered might not be profitable at all. Please run the simulation at opening price instead of closing price.

          • If the price gaps below our stop we will be taken out at a loss larger than our stop. Removing the stop produces “better” results. I’ve also been trading a similar system which drills down to the 5-minute chart. I assure you, it’s profitable. I encourage you to test the concept on your own platform. Thanks!

          • curious says:

            Or $1000 stop-loss condition needs to be removed when running at closing price.

  • AlphaDow says:

    For those using TC2000 or Telechart, this is from Bruce at worden.com regarding accum RSI(2):

    This is very simple if you want the running total of a non-Wilder’s Smoothed RSI:

    3 * RSI2.3

  • Rafael osechas says:

    Have you testing for 15 minutes and why you go out at 65
    Thanks

    • I’ve not testing a 15-minute time frame. The exit at 65 is not an optimized number – I just picked what I thought was reasonable. Of course you are free to test and modify the parameter to your liking.

  • justwonder says:

    Hi Jeff, I’m a novice trader and i’m wondering how can we actually “Buy on close when cumulative RSI(2) is below 5.” as stated for the rules in RSI(2)??

    Since we cannot predict today’s closing price, does it mean buying tomorrow’s stock at today’s closing price?

    Thank you 🙂

    • Good question. If you trade futures, things are a bit easier. I mainly trade futures and placing orders at the end of the day is simple. The market closes, your computer program calculates the results and places the order. Because the futures markets are open after the daily session ends, your order is filled. For stocks within TradeStation, you could simply have your system calculate the results of the RSI(2) 5-minutes before the close of the market. This can be done via programming or adjusting your session times on your trading platform. Your order is place before the close and your order is filled near the end-of-day price. Hope that helps.

      • justwonder says:

        Thank you so much for the reply. This definitely helps a lot!

  • JB says:

    Jeff, thanks so much for posting this. Love your blog.

    Re this system, I see that the eld is Long only. Have you tested this going short as well over 90?

    • Hello JB. Sorry for the long delay in getting back with you. I overlooked your comment. I have done some testing with going short and it was not very productive. However it might be worth looking into again, as it’s been many years. Thanks for the idea for a future article!

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