23rd Sept,2011
Strategy Name:Gap Rsi Theory
RSI (Relative Strength Index) is an oscillator that oscillates around overbought zone and oversold zone of 70 and 30.The General strategy as per books is to buy when the RSI exits Oversold zone and Sell/short when the RSI exits Overbought zone.The Default RSI parameters are 14,E,9 RSI.
However in my 10 years of experience I have come across many indicators and RSI has always been one of my favourites.I have developed Many Strategies with RSI which I teach my students (of course not Free!)
But I would Like to share one of the Strategies with you and that is Gap Rsi Theory
I have changed the parameters of RSI and made it a smoothed RSI.The Theory is,whenever the smoothed RSI exits the overbought Zone and there is a downward gap,one should short the next day (of course, looking at the market conditions)(Downward Gap means today's high is less than yesterday's low)
The same for going long.Go Long when the Smoothed Rsi exits oversold zone and there is an upwards gap.(Upward gap:Today's low is Greater than yesterday's high)
The RSI parameters are 5,E,3 smoothed by Average E7.Overbought and Oversold zones are 80 and 20
In the given below chart of Hindalco see the downward movement after the formation of this Strategy
Strategy Name:Gap Rsi Theory
RSI (Relative Strength Index) is an oscillator that oscillates around overbought zone and oversold zone of 70 and 30.The General strategy as per books is to buy when the RSI exits Oversold zone and Sell/short when the RSI exits Overbought zone.The Default RSI parameters are 14,E,9 RSI.
However in my 10 years of experience I have come across many indicators and RSI has always been one of my favourites.I have developed Many Strategies with RSI which I teach my students (of course not Free!)
But I would Like to share one of the Strategies with you and that is Gap Rsi Theory
I have changed the parameters of RSI and made it a smoothed RSI.The Theory is,whenever the smoothed RSI exits the overbought Zone and there is a downward gap,one should short the next day (of course, looking at the market conditions)(Downward Gap means today's high is less than yesterday's low)
The same for going long.Go Long when the Smoothed Rsi exits oversold zone and there is an upwards gap.(Upward gap:Today's low is Greater than yesterday's high)
The RSI parameters are 5,E,3 smoothed by Average E7.Overbought and Oversold zones are 80 and 20
In the given below chart of Hindalco see the downward movement after the formation of this Strategy
DATA OBSERVE IN BACK HISTORY ITS SHOWS PERFECT BUT ON REAL TIME MARKET ALL ARE FLOP.........IN FACT WE ARE USING ALL THE INDICATOR WHICH IS 10 YEARS OLD FOR US MARKET... AND WE HAVE NOT Develop A SINGLE INDICATOR WHICH IS USED FOR INDIAN MARKETS
ReplyDeleteDear,Friend
ReplyDeleteThe Strageies of Technical Analysis are based on a theory.However the way of implemenation change as per the markets.Because if one strategy worked for years,there would be only one uniform strategy and if that was the case I would have never shared that Strategy.My dear friend,no theory is wrong.its how you fail or suuceed to get maximum out of it.
Please dont use all indicators."Too much of analysis leads to paralysis."
One request:Dont try to learn on your own.Eklayvya learned on his own but could never be arjun and History repeats