morton13- RSI 2 strategy for AAPL, it will work at times when the
stock is trending and has minor pullbacks, but over the long term
it's not a good strategy. The RSI 2 strategy is best used for
indexes and ETF's vs individual stocks, because they trade
differently from a stock. Indexes tend to get oversold and
bounce, and overbought and pullback, they can enter very strong
trends at times i.e. they always retrace back to the mean, and they
can't go to zero. Remember the RSI system is a mean
retracement system. Whereas an individual stock, while it
will trade in this way most of the time, a stock can go parabolic
and have extended rallies or sell offs without hardly retracing to
the mean that an index or ETF never would, and they can got to
zero, it's these times when the RSI 2 fails.
here's the statistics of
the RSI 2 system used on AAPL going back 10 years,as you can
the profit factor is only 1.1. total gain is 205K, total loss
is 187K. 68% winning trades, but with a profit factor of 1.1,
ugh.... largest losing trade is 34%, largest winning trade is
16.9%. Average winning trade is 3.4%, while the average
losing trade is 6.7%.
See the main stats page as well as the profit curve. You
can see the long term profit curve has no trend, it's up and down
hence why the PF is only 1.1 and not a viable system.
However from May 2009 the
strategy has been a winning strategy (see the profit
curve where I drew the uptrend line, that's where the system went
profitable) with a profit factor of about 4 with 77% winning
trades, so that's good, but then again, what hasn't been in an
uptrend since 2009? Again while AAPL has been in a strong
uptrend since the bear market bottom, the RSI strategy has done
well. Just like anything, you have to know when to use it and
when to stop using it. once AAPL starts to finally top out, I
bet the strategy will suffer again.
Otherwise as far as using
a 2 RSI on individual stocks, Tom and I both use it as a
guilde, but we don't trade off it alone. If we think a stock
is in a strong uptrend and we are looking to buy a dip. then we'll
use it as a guide, but not as mechanical system for stocks
your welcome :) though it wasn't a quick response, I
wanted to give you a good well thought out replay, so I did some
research for you that took some time before posting.
Anyway you may want to manually refresh the blog as I edited
some of my sentences to make them read better. The one problem with
the blog auto refresh is that it will NOT update/refresh an old
post
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Apple and rsi(2)
Posted by morton13 on 3rd of Apr 2012 at 11:21 am
Has anybody tried using the RSI(2) to time purchases for apple, seems to work well...
morton13 - RSI 2 strategy for
Posted by matt on 3rd of Apr 2012 at 11:42 am
morton13 - RSI 2 strategy for AAPL, it will work at times when the stock is trending and has minor pullbacks, but over the long term it's not a good strategy. The RSI 2 strategy is best used for indexes and ETF's vs individual stocks, because they trade differently from a stock. Indexes tend to get oversold and bounce, and overbought and pullback, they can enter very strong trends at times i.e. they always retrace back to the mean, and they can't go to zero. Remember the RSI system is a mean retracement system. Whereas an individual stock, while it will trade in this way most of the time, a stock can go parabolic and have extended rallies or sell offs without hardly retracing to the mean that an index or ETF never would, and they can got to zero, it's these times when the RSI 2 fails.
here's the statistics of the RSI 2 system used on AAPL going back 10 years,as you can the profit factor is only 1.1. total gain is 205K, total loss is 187K. 68% winning trades, but with a profit factor of 1.1, ugh.... largest losing trade is 34%, largest winning trade is 16.9%. Average winning trade is 3.4%, while the average losing trade is 6.7%.
See the main stats page as well as the profit curve. You can see the long term profit curve has no trend, it's up and down hence why the PF is only 1.1 and not a viable system.
However from May 2009 the strategy has been a winning strategy (see the profit curve where I drew the uptrend line, that's where the system went profitable) with a profit factor of about 4 with 77% winning trades, so that's good, but then again, what hasn't been in an uptrend since 2009? Again while AAPL has been in a strong uptrend since the bear market bottom, the RSI strategy has done well. Just like anything, you have to know when to use it and when to stop using it. once AAPL starts to finally top out, I bet the strategy will suffer again.
Otherwise as far as using a 2 RSI on individual stocks, Tom and I both use it as a guilde, but we don't trade off it alone. If we think a stock is in a strong uptrend and we are looking to buy a dip. then we'll use it as a guide, but not as mechanical system for stocks
Thanks Matt for the quick response!
Posted by morton13 on 3rd of Apr 2012 at 11:53 am
Thanks for the info very helpful...
your welcome :) though it
Posted by matt on 3rd of Apr 2012 at 12:20 pm
your welcome :) though it wasn't a quick response, I wanted to give you a good well thought out replay, so I did some research for you that took some time before posting.
Anyway you may want to manually refresh the blog as I edited some of my sentences to make them read better. The one problem with the blog auto refresh is that it will NOT update/refresh an old post