Rank: Advanced Member
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Joined: 10/15/2005(UTC)
Posts: 31
Location: The Netherlands
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Dear all,
I just read Trading professional written by Constance Brown, a very good book and it improved my trading. Now i would like to go a step further and programm some ideas. The first is the range rules on RSI. According to Brown one can also identificate trends with RSI (and stochastic). She determines trend on the following manner:
- bullish: RSI fails to break down the 40 level. RSI travels between 40 and 80.
- bearish: RSI fails to break up the 60 level. RSI travels between 20 and 60.
- and to complicate things further, sideways: between 40 and 60.
See the attachment for a graphical display.
I don't know how to programm this in metastock language. As long as the RSI travels between 40 and 80 it is bullish. But if the RSI falls through the 40 it is bearish until it raises over 60. Does anyone have the skill to programm this?
Thanks in advance!
Kind regards
Arne from the Netherlands :D
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Rank: Advanced Member
Groups: Registered, Registered Users
Joined: 1/19/2005(UTC)
Posts: 1,065
Location: Koh Pha-Ngan, Earth
Was thanked: 2 time(s) in 2 post(s)
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Arne, your chart shows trends based on RSI trendlines which have been drawn in hindsight.
Furthermore, the bullish and bearish RSI trend logic conflict with each other.
The real question is not whether anyone has the skill to program the above, but rather whether the person that has put forward the RSI chart and trend logic, understands that unfortunately real trading does not have the luxury of hindsight. ;)
jose '-)
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Rank: Advanced Member
Groups: Registered, Registered Users
Joined: 10/15/2005(UTC)
Posts: 31
Location: The Netherlands
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Jose, you are right that the rules are conflicting. Both a bullish and a bearish market travel below 60 and above 40. As soon as a bullish market breaks through 40, it is bullish. On the other hand, if a bearish markets reaches above 60, it is bullish. I don't think this has to do something with hindsight drawing. I do agree that the rules are conflicting and i don't know if it is possible to programm. Maybe something like finding support on the 40 (bullish) and finding resistance on 60 (bearish).
Maybe you have some better ideas (if it is possible at al)?
Arne
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Rank: Advanced Member
Groups: Registered, Registered Users
Joined: 1/19/2005(UTC)
Posts: 1,065
Location: Koh Pha-Ngan, Earth
Was thanked: 2 time(s) in 2 post(s)
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Arne, my view is that basing any trend strategy on any single indicator, eventually leads to disappointment.
As much as I wish this wasn't true, overbought/sold levels of RSI have little or no connection to the real forces behind market trends.
jose '-)
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Rank: Advanced Member
Groups: Registered, Registered Users
Joined: 10/15/2005(UTC)
Posts: 31
Location: The Netherlands
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Thanks again for your reply. I think we have a little misunderstanding. I didn't say that one's is able to determine a trend with a single indicator. I think we agree that this is only a part in the toolbox. The stochastic (if used by the appropriate periods, normally not the default but half the cycle) does have the same characteristic. Besides this i determine trend with moving averages, trendlines and macd (also use elliott, gann and fibonacci for price projections).
When i read this idea i was wondering if someone is able to programm it. You also managed to programm divergences (elder thought that wasn't possible). It is very interesting to hear your opinion about it.
Kind regards,
Arne
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