Does anyone have any experience using RSI? It seems to be a good tool to use, but I cannot quite figure out how accurate it is. From what I have been back testing it seems to show pretty accurately with the period set to 10 when the market is overbought and oversold. Any insight from someone who is more experienced than I?
Rsi
dca78_00
#2
James - I tested RSI quite a bit. It depends upon how you want to use it, as to how well it works. Like any other indicator it works better in some instances more than others. A trending market it will do fine, in a ranging market it will eat you alive.
There are a lot of traders that use it as the holy grail, but I would venture to say that they haven’t done much backtesting on it. I read a book once, can’t remember the name, that said reducing the RSI period to 2 was the absolute best way to figure out turnarounds in the market.
Most indicators, on their own, don’t work well over the long run. You can try to minimize the drawdowns if you add something like Bollinger Bands with it.
I have tried just about every indicator, changed periodicities, and have not found any that work reliably over the long run. That’s why I am using APEX!!!
darrell
#3
RSI is an indicator based on past price information. It stands for relative strength index. It was built to show when the market was overbought/oversold which means it was originally made to be an osciallating indicator.
It and all other oscillators do a poor job at this as they are lagging (based on past price movement) and a market can always be more overbought more oversold.
The best use of RSI is that of divergence and using it for a tight trailing stop when scalping (show how i refer to it in the scalping video under apex elite system section of the forum) - but NOTE i put only for scalping nothing for actually catching good decent moves on a consistent basis in all market conditions