2 day rsi trading strategy
Private Messages Chat Ideas Published Followers Following Priority Support. Larry Connors RSI-2 Trading System!!! This year I am focusing on learning from two of the best mentors in the Industry with outstanding track records for Creating Systems, and learning the what methods actually work as far as back testing. I came across the RSI-2 system that Larry Connors developed. I was shocked by the results. So I thought I would provide them for you. The RSI-2 Strategy is designed to use on Daily Bars, however it is a short term trading strategy. The average length of time in a trade is just over 2 days. But the results CRUSH the general market averages. Detailed Description of Rules For RSI-2 System are In The First Post. Also Provided are General Results Testing Stocks and Forex. And a PDF You Can Download To See Detailed Back Testing Results!!! Indicators now published in Public Library: A 2 Period RSI with the upper line at 90 and the lower line at 10 looking for Extremes. A period Simple Moving Average, and a 5 period SMA. Buy Only When Stock is Above SMA, AND Below 5-Day SMA, With RSI Below 10 Short Only when Stock is Below SMA, AND Above 5-Day SMA, With RSI Above 90 Exit Criteria: If Buying EXIT when Price goes Above 5 SMA. If Selling Exit when Price Goes Below 5 SMA. The Aggressive Entry would create more Profits However I used the Conservative Entry in my back test. Rules Used in Backtest: If Entry Condition True Then Enter Next Day At Market Open. If Exit Condition True the Exit That Day At Market On Close IF Close is Above the 5 SMA in Up Trend, or Below the 5 SMA in Down Trend. So Filtering the Direction of Trades You Take Would Significantly Increase The Results. Only 1 Entry…No Scaling In. So multiply the Pips times your Trade Size. Day 5 Years Overall Winning Percent - Highlight Bars and 5 SMA and SMA. Connors never could find a STOP that made the system perform better. Therefore there isn't one in this system. Even if you get a big gap that moves against you the 5 period avg will quickly catch up and exit you out of the trade. Although if you read near the bottom of this thread. I will code that system sometime soon and report results under that thread. Thanks Chris for all of your really helpful work and guidance. I am using the CRSI strategy daily and I have been reading one of Mr Connors books that says a better way to implement this strategy is to use what he calls a cumulative RSI where the RSI values when added together would stay below, lets say, 35 for 2 days. Could you incorporate this cumulative structure into your current 2 period RSI strategy code? Thank you again for your patience with us less talented scripters!!! I am very late for getting best strategy rsi2. Kindly guide me for getting rsi2 strategy afl for back test - tpaise gmail. ChrisMoodyDo you have updated links for this? Quite a bit of interest in this thread, but no active links - can you come through with the assist? ChrisMoodyI know that this is an old post, but good job on this article. If you have any other strategies, please share. FYI, here is an easylanguage code for this strategy for tradestation that can be used on chart or radarscreen: Price CloseLength 2OverSold 5OverBought 95OverSColor CyanOverBColor Red ; variables: Only yesterday I was reading about this RSI2 strategy. Connors calling this "the only indicator he will choose" intrigued me actually. Thanks Chris for sharing the backtesting results. I was pretty shocked at the consistency of the results I also tested several individual stocks I just didn't want to make the PDF pages long. One key fact I forgot to mention When you get multiple day bars if you scale in a maximum of 3 times then the WIN Rate Goes Up Exponentially So a lot of the losses would have been wins by allowing multiple entries One thing I've learned From my two mentors If you can't write the entire strategy including all entry and exit rules etc on a 3 by 5 notecard then it's too complicated. It's Amazing how simple the Systems strategy guys use One of my mentors gave me two forex systems he created. Based on testing back to it's typical to see largest con sec wins of 20, and largest consecutive losing trades at ChrisMoodyHello Chris, nice work thanks for this! I was caught by this post, would you be willing to share this strategy or at least the basic concept behind it? Great stuff, wonder what the results will be using the Connors RSI? This is a great method with few false signals, one thing that gets annoying is when you strategy multiple entries. I tried filtering the RSI Chris used with the Connors RSI ran with your suggestionusing the same levels Over 90 for OB and under 10 for OS. Surprisingly I came out with some good results and it seems to save you on potential losers. However, you'd also have to deal with the reality of fewer entries. What I found is if you wait for both RSI's to leave the extreme zone then you can take a position, this has the benefit of not taking one of the multi-signals. If I didn't mention above I also ran backtest with scaling in up to 3 times on the multi signals and that drastically increased the results. I'm not sure if you were referring to false signals with your green and red arrows. The red bars were when the RSI was over The green arrow pointing to the RSI isn't part of the system. The system is only prove on the Daily Bars. And I did run the backtest on the connors RSI and the results were far worse. The system doesn't have the ability to produce LARGE wins on any one trade With a high win percentage The only applicable "Filter" is mentioned above In Extreme trending markets Not taking Countertrend trades during the times the market is trending. I see where I misunderstood now, it took me a bit of scanning to see what you meant. Hey Chris, what program were you using to run your backtests? Hey Chris, Could you also PM me with the program? My apologies for never answering you. Just noticed I didn't. Your welcome to PM me. With Strategies and backtesting expected to be released In December I would hold off on any 3rd party platform Hi Chris, a really impressive study! May you also send me the PM about your backtesting tool? I will really appeciate it. Thank you in advance! I get buy and sell signals no matter whether we are above or below the MA What make I wrong? Do you have an idea? Just checked and it works You have two options. Per the Chart at top of page Right click on chart and go to properties and change candles to White Add the lower indicator which highlights where there are sell signals and buy signals. I don't trade this system I just tested it and provided the results. Larry didn't use a Stop Loss This Backtest results only had one Entry Larry would take multiple entries to bring his cost basis down I tested taking 3 entries and it drastically improved the results. Only you can answer if it fits within your risk tolerance. The system was designed for stocks Clients that trade with over a Just something to consider The use of real money to make money is another storyso i dont think your back testing is as valid as it looks. Also i have known this guy with a 95 percent win rate, he uses leverage Also alot of good systems on myfxbook have leverages over 50;1. I've rsi full time I wish everyone the best So let's be clear I could care less how you choose to manage your own money I simply mentioned the the Forex Study regarding Leverage. I know a trader who started with a K account. He found a statistical edge in trading the Euro on 15 minute timeframe. He averaged 3 trades per day. Went "All In" Every trade His Trade Setup stopped working. So no reason to defend your position Do what you want I'm just hear to help anyone in any way I can. As for the RSI-2 system I don't trade it because I already have my own trade setups that have gotten me to where I am at. More importantly systems with a extremely high win rate you'll find have a lot of small profits. So you can doubt the results of that system if you want to. A few of these traders are leaders in our industry in regards to developing systems and the correct way to backtest. You can choose to doubt the results above. I coded in the very simple rules for the system I tested in extreme bull markets, Bear markets, and typical range bound markets. I was pretty shocked at the consistency, and consistency between all asset classes. That's why I decided to share the results. Because there are a lot of traders on here who haven't found a statistically reliable system yet. But let's be crystal clear I made a statement and backed it up with Statistical Results. Then you come on this thread an state, "so I don't think your back testing is as valid as it looks". You'll have a hard time discrediting me since I don't offer opinions. I only state whit has been proven statistically valid. So next time you try please back up what your saying with more than your opinion. If I took what you were trying to say out of the context in which you meant it I apologize. I'm here to help other traders grow Can you personally tell me what system are you using now? Beacuse you wouldnt publish this system if its so effective as it would be your personal weapon strategy trading. How much money have you made trading so far then? Watch this video with jason and you will understand that "How much money have you made" does not matter! So well said Chris - Great work - Great job. Trading the RSI 2 is great, one of the most powerful strategies around with a proven statistical edge. You can test it and see. But the system was specifically designed for Daily Bars by Connors. Thank you, Chris, for this wonderful idea. Perhaps I'm being dense, which would not be unusual, but I don't fully understand the yellow bars. Could you explain the significance of multiple yellow bars i. Although sometimes the position loses money when this happens. I could have coded it a little better. But not worth the time when we have Strategies coming out in December. Then we can code Entries, Profit Targets, Stops with Precision. I'm going light on all of the strategies I have Thanks, for the reply, Chris. I realize that things will be different in December, but, until then, I'm still curious about the significance of multiple yellow bars, sometimes separated by a white bar or two. Do they imply a phased taking of profits? Not worth recoding with full Strategies coming out. Good Luck, let us know how it works. Maybe if you were to automate it but I wouldn't be too sure it'd work, with all that HFT noise down there. I trade intraday, some 5m and 15m, as well as longer timeframes without a problem. People are too scared of HFT imho. They are scared by listening to someone because that someone wants to make money from webinars and selling books, in other words, RISK FREE - FREE money. That's just my take on those flash boys. Mostly I have seen those HFT trades are too quick for me to act. This is an important topic. Retail Traders here the news HFT is creating an unfair market HFT has an EDGE if your trying to scalp for 1 to 2 ticks. They have Servers within walking distance to the exchanges with dedicated feeds directly in to the exchanges. Therefore there orders are executed within microseconds We all want to have an edge And if we discovered a "True" edge against other traders Would that be illegal? Retail Traders Constantly ask the Wrong Questions. How can I compete with HFT. There are many "Edges" you can find in all asset classes, on all timeframes. The questions we ask ourselves are SOOO Important. There are examples on a Daily basis right here on TradingView. You can discover a Statistical Edge Yourself Or you can follow the top people on TradingView and learn the Statistical edges they have found. This is what is what is so Great abut TradingView. We have traders that started trading TODAY And we have Traders who have been Trading Full-Time for well over 10 years. I wonder if you can find one of us who has reached the ability to Trade Full-Time Thanks a lot for your generosity of sharing the knowledgeGod bless I tried to repeat the backtests in amibroker. I used for backtests 3, shares traded on the Nyse from to The result was not impressed Anybody tried to repeat the backtests? What results were obtained? I'm happy to help you out What exactly are your entry rule on the Long side and entry rule on the downside. Not you Amibroker code. Just write it out in plain english. What is your exact exit criteria on the Long and short side. You should be able to write this out on less than half of a 3 by 5 index card. Thank you willingness to help. I use the following settings: Buy on next open when True: SHORT on next open when True: I did not use multiple sign. BUY on next open when True: SELL on close when True: I never saw your responses Sorry for the delay In the next day or so I'm going to go through this thread and answer any trading that haven't been answered Hey Chris, I'm interested. I did the backtest and I got similar results to vitosh. I know you are a busy guy, so no hurries. Just know that we eager to know what's wrong and when you get a chance please correct us. Where can I get this trading system automated so I don't need to do anything? I don't own software and I don't want to learn a programming language. I just want to set it and forget it. I'm not sure how to answer your question If you don't own software If you don't know how to code TradingView just released Beta Paper Trading At that time I'lll be happy to provide the code. I currently use Interactive Brokers but I don't care which broker I use. I'm in no way trying to be ruse You can either go buy a Multi-Thousand dollar platform which is set up to Auto-Trade Gets out of Beta Testing on Chart Trading Implements IB as a Broker you can trade through. If you asking for a time frame based on the above That I can only give partial info. Out of Beta No idea. I know the owners have a great relationship with IB Let me tell you the problem with this strategy The results I posted were on Large Index's Note the account size required to take the trades in that amount of stocks. If you narrow it down to a much smaller group Unless your account size is in the millions there are better strategies to trade. In no way trying to be rude Feel free to ask a more specific question If you look at the PDF Some are broken down in to Long and Short Trades Divide that by Avg Trade close to 4 days If you look at the 80 Forex pairs the total number of trades per year is proportional to over if there were forex Pairs. So pretty consistent across all 3 groups. I'd have to assume adding additional stocks would take the number over I haven't run the test As long as you were accurate at defining a Up-Trend and Down-Trend Trading ONLY with the Trend Produced significantly better results However, I would take not of the Drawdown trading a basket of stocks So with a little more research to verify this draw down is normal for stocks trading shares per trade I have no idea what the answer would be And I would Research this Would trading a basket of stocks that had 52 Week Highs or Lows within the last X days or Weeks be a very profitable group of stocks to trade? Or also researching what if we only traded the top 2 Best and or worse Sectors and the Basket of Stocks within those two sectors My guess is if they generated enough trades two things would be in our benefit I really think that would be worth checking in to I guess that would be an average. In strong downturns which produce buy signals stocks are very much correlated. I ran a backtest on 30 stocks for this strategy, and 10 simultaneous positions was not uncommon. So that would translate to about simultaneous trades on sp ChrisMoodyJust a side note Totally annoyed by this. But what choise do we have? It's as if they have us by the base of our snarglies. Thanks for this Chris. I have one question though. I coded this in Tradestation and got all the same win rates etc. On lower priced stocks, even though they had a high percentage of winners, the average trade was so small as to not be worth trading, after costs. I think your reading the Metrics wrong. There were a total of a little over 7K Trades. Divide the Profit or the 3. The Google number doesn't seem accurate If I have time I'll run Googles numbers for the exact same time period and post the results. Yes that is how I am reading that metric. Here's a screenshot of the Google backtest. Hey Chris for sharing! I've been searching for strategies that are proven to be statistically successful, so this is perfect. Just a small question about your exit condition. Chris, You might want to look at the following: The basic difference between your strategy and the above is that the 10 sma is used as an exit criterion. In addition, a stop loss is used. I'll take a look at their Stop Loss Criteria and code it eventually with the changes. Larry never could find a stop loss that improved the results. And I'll test the other changes to make sure they didn't curve fit it I'll test on exact same criteria I did before Thanks for the post and info though. Actually, Jeff Swanson says that he was mistaken in his initial backtest and that a stoploss does not improve performance. But, he says that raising the exit criterion to a 10 sma cross does. Walking out the door right now Do me a favor and if I don't reply by tonight post a comment below reminding me Let this be the reminder you asked for. And, thank you, Chris, for the wealth of information and ideas you share with the Tradingview community. My To-Do List is getting long But there are a few questions in this thread I need to answer I have been told by people that some traders are making k a day from their own home! Do you guys think thats possible at all? As brokers make the most money, when their clients looses. It depends how strategy money you have to trade with Cheeno Ren. The real questions to ask anyone who trades: What is your average winner, what is your average loser, how many trades per day do you make? How much do you risk on each trade? The question is that if broker will let you make that much. I think they will manipulate prices once you make that much, you are a big threat to them as a client. Cheeno Ren Cheeno Ren. What i meant is that, if you had enough capital and a good strategy. Is it possible for traders to make k a day? My friend, that is not the question you should be asking, if you are new to this business. I have made this mistake by being driven by how much you could make. You should rather ask. It is like any other business, if you have a good business idea, trading plansupported by good discipline and strategy. And if you keep at it. If you just want to open a shop and start trading I have a system that i have used for one year with positive return now and i have been studying trading tor 3 years. I am just afraid my broket will try make me loose to loose my capital. What is the limit the broker will let you make? I'm assuming you are using a regulated broker. It is not in their interest if you walk away or they take you out of game al together. In my experience Good trades in larger timeframes and regulated brokers are rarely affected by it. I will rest this case here. There few notes you could check on brokers few fellow traders have posted e. I uses Oanda, what do you guys think of this broker in terms of account day trade size? Thanks for sharing this! Very good resource for other traders! There is one small question which I couldn't find the answer in your backtesting document. How much is the initial capital you used in your backtest? It shows capital required based on the DrawDowns listed at the top left. I have several options when adjusting for capital in backtests One is to put in a Certain Amount of Capital, One is to put in certain amount of Capital per trade, and another is Total Shares per trade. I chose Total Shares per trade rsi allow test results to include all trades that happened Chris thanks for the info. Very good, cant say enough. I have a few questions that may have been answered or even in your backtest but I want to try and clear them up. How do you average That's 65 trades in a month? How is that possible when there are only 21 trading days in a month is we are only trading an index like spy? I am probably missing something here. Also its hard to come up with the amount of capital required if I don't know the price of the index you were buying. It just says spy, not the exact one, unless you are including all stocks of the spx. Thanks again for all your help. Chris I was part Of Larry's trading group Chairmans Club. Filtering system was historical volatility. We traded many systems like this, most with slight variations. These mean reversion systems worked really well. They did slow down a little from with the low volatility environment. Chris, I think the hardest part is to know when to add the second lot. A stock can keep on going down. Hi Chris, This is a very interesting topic and I stumbled across it by chance. I have been trading this strategy for a while, albeit, with a few variations. I only buy when the RSI2 is below 5 and not I have found between the market occasionally continues to drop for several days. If you can hold out until the RSI is below 5 I have found the market usually reacts better to that. I haven't backtested it but it is a personal preference. I do my basic fundamental checks to ensure price isn't dropping for a fundamental reason slowing income, reduced profits etc. Thirdly, as Chris stated the system works a lot better when going with the trend. I only buy in bull markets when the RSI2 is below 5. I tend not to trade bear markets, but when I do I only sell above I won't short in a bull market or buy in bear market. Finally, I don't close out on the 5 or 10 SMA. I set my profit targets usually at the previous swing highs. This is purely how I have adapted the system to suit my trading needs and this indicator should be in your arsenal of weapons to help execute trades, not the only one. I've noticed some posters are asking how to automate this system. People need to remember that an indicator is just an indicator, it is not the holy grail of trading and you should still apply your own trading strategies alongside this system. To blindly follow will only end in tears and an empty wallet. Thanks for taking the time to share your results Chris. Thanks for your comments. Soon you'll be able to get statistical numbers to see if your adjusted method outperforms the method Connors released. ChrisI know this is an older thread, but the Upper is giving a compilation error message. Can you take a look at it? This is a brilliant system indeed. I like trading binary options, would you recommend this system or do you have another system that is extremely good for trading binary options? I have developed the rsi 2,5sma and sma for ctrader platform. Please use this url to download and backtest. What has been your experience with using the 5sma stop loss rule, as against not using a stop loss? Hello Chris, First of all thanks a lot for putting all this together, it's really interesting for a newcomer like me: I had a little question tho, it seems that in this indicator, in the lower part, the RSI is getting colored trading even when the RSI doesnt go below I probably misunderstood what the code actually does but from my very limited knowledge it should get the lime color only when the rsi is below 5. So basically am i doing anything wrong or am i just lacking a piece of the puzzle? You can see what i mean on the included screen shot if i messed up the english language too bad: Thanks for reading me and sorry for the broken english. Hi Chris, yes is true the system is incredibly simple but effetticve. But it work good in equity markets beacause of their mean revrsion nature that they had devoleped buy the early I dont think that the system with the same rules offere the same returns in forex market. This beacuse the momentum nature of forex market. All my respect, David. Very interesting Chris - Thanks for taking the trouble to publish. For information of readers Pro Realtime can do backtesting, automated trading both manual setup or coded and comes free if you trade via IG. For v advanced users only is my guess. Hi, I brand new here - signed up in Free account - stumbled upon this thread via a Google search. I am an old Wealthlab 3. Note sure if anyone is interested, but I'll post the WL code I used to back-test 27 rsi variations of Connors' RSI 2 strategy, which you guys can use if you wish and translate to Tradeview code accordingly. The code is very readable, IMO, and may provide some impetus for optimization. BTW, I trade trading Connors Composite strategy on equities. Chris, can you please repost the code? The pastebin URLs are no longer valid. Thank you in advance. It can be used in any stock??? Im trying to optimize this strategy for the forex markets. I have created a java robot for use on jforex, however i am no where near getting the same results as you did on forex backtesting for 5 years. Day have the algo for mt4 and ctrader send mebyour email Thanks for posting this trading idea. I created a simulation model with 40 German mid trading that simulates a virtual investor who follows a trading system. Basically he decides the end of the day based on Closings what to do and gets in the market with the Opening prices of the next day. If he doesn't have enough cash left however, he cannot buy any additional stocks even if there are more buying signals. His watchlist is always the same 40 stocks, with the first ones having a higher priority in case he's out of cash. The benchmark Buy-Hold strategy: The results of the RIS-2 strategy: More particularly, if your costs per trade are low, because it has so many trades. For good results the costs per trade should be around 0. You need a good broker and a decent amount of money, the order volume mustn't be too small and hence the market capitalization of the stocks you buy shouldn't be too low. Hi Chris -- the pastebin links no longer work. Is there anywhere else I can find the code for the indicators and the strategy? Thanks for posting this strategy. I have back tested with CQG and it is impressive. However strategy exit puzzles me. I believe you're getting better exits than you would in real-time, the reason being using a SMA as an exit with daily bars will give you bad data. The only way I see to get around this is exit on close if the price is passed the SMA rsi of course that gives worse results. I guess another way to do it day be to use yesterdays SMA since that's fixed but once again the results won't be as good. Correct me if I'm wrong or misunderstand. You have cited the major design flaw with ALL of larry connor's strategies. They are great academic strategies but fall apart in real trading. The worst part is that he does not offer any realtime historical results with any strategy. G13Mandid you ever get a reply for this? I'd like to get this trategy ported to Quantopian - anyone want to team up on it, I'm down. ChrisMoody I've gone through a number of strategies here on TV and find all strategies interesting on the approach. After reading comments, it is sad on the number of traders that ask for your specific system. These traders are the largest majority of people who lose money in the markets and will never make it as a trader unless they change their approach to trading. These same people 'want' to learn without putting in the demo time, reading books, watching videos, etc. Blog House Rules Moderators People Chat Chat History Press Referral Program Advertise. Stocks Forex Futures Indices Bitcoin Elliott Waves Harmonic Patterns Technical Analysis. From the creators of MultiCharts. Rsi market data provided by ICE Data services. Ideas Scripts Chart United States. 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