[jswinder]

Good Good GoodGood

[peterjerome]

Originally Posted by Do Or Die »

Thanks for the comment... it seems that you are calling IS what I call 'internal relative strength'... how exactly do you measure it?

DoD,
IS is calculated by dividing the close by S&P500. an increasing IS indicates some factor outside of market influence..e.g. company internals, industry, above avg buying...
if you understand easy code...this should help.
good trading,
Peter.


var aFPArray = new Array();

function preMain() {
setPriceStudy(true);
setStudyTitle("R.S. vs S&P 500");
setCursorLabelName("SPX") ;
setDefaultBarFgColor(Colo r.black);

aFPArray[0] = new FunctionParameter( "Divisor", FunctionParameter.NUMBER) ;
with( aFPArray[0] ) {
setLowerLimit( 100 );
setUpperLimit( 2000 );
setDefault( 1000 );
}
}

function main(Divisor) {
if (Divisor == null) Divisor = 1000;
var vClose = getValue("Close", 0, 1);
var vSPX = getValue("Close", 0, 1, "$SPX");
if(vSPX > 0) {
return (vClose / vSPX * Divisor);
} else {
return;
}
}

[rseye]

Hi,
The RSI is my favorite indicator and is the basis of my trading
It is usually based on the closing price so its trace is the same as that of a line chart, other when it shows either regular or hidden divergence
The trace is contained within the limits of 0-100

Basics
Cardwell found some interesting facts regarding particular RSI levels:
An uptrend is contained within the 40-80 RSI levels
A downtrend is contained within the 20-60 RSI levels
A sideways market is contained within the 40-60 RSI levels
The RSI is most sensitive in the 40-60 range
Check it out - IT WORKS (I use RSI (9))

Uptrends can start from basically 2 conditions:
From a breakout from congestion (40-60 levels)
or from a downtrend or major correction, from a level below 40, when it breaks above 40 and confirmed when it passes up through the 60 level

The opposite for a downtrend
congestion (40-60) break below 40
downtrend - breaks below 60 and confirmed when it breaks below 40

Summarize:
Uptrend - 40,60
When it is trending the trace operates above 60,
when it is in the 40-60 range, it is going sideways (not in a downtrend), it could go either above 60 or below 40 (start trending), so the trend is neutral
When the trace operates below 40 it is trending down
when it retraces to operate between 40 and 60 - again the trace could break either below 40 or above 60 (i.e. begin trending), so it is neutral

Trending
An uptrend is still in place so long as the trend stays above the 60 level
A stable uptrend tends to operate in the 60-70 levels
i.e. trend reversals often occur at the 70 level, but a good trend will test the 60-70 levels multiple times
If the trace operates above the 70 level, then its momentum is becoming unsustainable, particularly as it approaches the 80 level - it may be a good policy to trail a stop below each candle above the 70 level
Again a really strong trend can stay above the 70 level and retrace to rebound several times before it finally reverses - that's trading
But the majority of the time, the first retrace is signals the end of the trend
Downtrend
Opposite

Uses
1 New trends - breakouts and reversals - as above
2 Using various RSI levels as Support / Resistance for S/R trading
3 Using the RSI trace for trendline and pattern trading
4 Using RSI for divergence trading

As we have covered new trends already lets look at the others
RSI levels used as Support/Resistance
Drawing S/R lines on pure price action can be a bit subjective at times, as what may appear as important levels to one person may not be significant to others...........
Also trendlines must be drawn for each instrument we trade, and they may require updating at times........

Using RSI S/R levels will overcome this "problem"
Our RSI levels are 20, 30, 40, 50, 60, 70 and 80
These lines are used on ALL charts, thet never change
To reduce this number and help unclutter out charts, the 20 and 80 levels can be removed.
Remember once price goes above 70 or below 30 , we trail a stop below each candle
So we are left with just the 30, 40, 50, 60 and 70 levels
Try it, it works great - and we get early signals at least as good as pure price action

3 RSI trace for trendline / pattern trading
The RSI race which is basically a series of pivot hi's and lo's is ideal foe drwing trendlines and chart patterns - they often give early signals
Chart patterns in the RSI 40-60 range (congestion) are well worth looking for
Trendlines - the current trendline is the last pivot low that can be connected to the furthest away pivot lo withour passing thro the RSI trace etc etc

4 Divergence trading
Once we have our initial 2 pivot lo's or hi's to define our divergence with price - continue this line into the future to act as our trading trendline
Then use our trendline trading management to manage the trade, if price should
accelerate and trace a higher pivot lo (in an uptrend), then use this pivot low with the previous pivot low as your new trendline etc etc
The last two pivot lo's hi's is the current trend direction - use with discretion

The RSI works very well with cadlesticks and Bollinger Bands

Conclusion
The RSI indicator is very versitile and defies the often quoted GUROs??? who say indicators do not work or that they lag price
When used properly it can give a very good indication of the price action to come

I hope the above ramblings, they are probably a bit disjointed, make sense and be of help to some traders

Time for dinner, no time to back check

Merry Christmas from Australia
Peter

PS I hope there are no errors

[Do Or Die]

Originally Posted by peterjerome »

DoD,
IS is calculated by dividing the close by S&P500. an increasing IS indicates some factor outside of market influence..e.g. company internals, industry, above avg buying...
if you understand easy code...this should help.
good trading,
Peter.

This is very important for my trading too... see here, I made two live calls in APPL based only on the change in relative strength (or IS).

I have a feeling our trading has lots of elements in common... will look forward to interact more with you.

[Do Or Die]

Originally Posted by rseye »

Hi,
The RSI is my favorite indicator and is the basis of my trading
It is usually based on the closing price so its trace is the same as that of a line chart, other when it shows either regular or hidden divergence
The trace is contained within the limits of 0-100

Fantastic Rseye! It is comprehensive as well as concise.

I have programmed some of these rules, you may like to check backtest results at Regime Adjusted RSI System

[McKeen]

DoD,

I think you deserve kudos for posting your system and the structured way you present it - very nice indeed.

I might not be too certain that it will stand the test of time, but like I said your approach is brilliant so keep the spirit - you truly are a nice addition to the forum!

To the other members, try not to post your suggestions on which way you think it should be done now that DoD has moved to a new thread in an effort to keep it cleaner.

[Kiwinz]

:Resourceful thinking - thanks & Merry Xmas to all.
Kiwinz, New Zealand

Originally Posted by rseye »

Hi,
The RSI is my favorite indicator and is the basis of my trading
It is usually based on the closing price so its trace is the same as that of a line chart, other when it shows either regular or hidden divergence
The trace is contained within the limits of 0-100

Basics
Cardwell found some interesting facts regarding particular RSI levels:
An uptrend is contained within the 40-80 RSI levels
A downtrend is contained within the 20-60 RSI levels
A sideways market is contained within the 40-60 RSI levels
The RSI is most sensitive in the 40-60 range
Check it out - IT WORKS (I use RSI (9))

Uptrends can start from basically 2 conditions:
From a breakout from congestion (40-60 levels)
or from a downtrend or major correction, from a level below 40, when it breaks above 40 and confirmed when it passes up through the 60 level

The opposite for a downtrend
congestion (40-60) break below 40
downtrend - breaks below 60 and confirmed when it breaks below 40

Summarize:
Uptrend - 40,60
When it is trending the trace operates above 60,
when it is in the 40-60 range, it is going sideways (not in a downtrend), it could go either above 60 or below 40 (start trending), so the trend is neutral
When the trace operates below 40 it is trending down
when it retraces to operate between 40 and 60 - again the trace could break either below 40 or above 60 (i.e. begin trending), so it is neutral

Trending
An uptrend is still in place so long as the trend stays above the 60 level
A stable uptrend tends to operate in the 60-70 levels
i.e. trend reversals often occur at the 70 level, but a good trend will test the 60-70 levels multiple times
If the trace operates above the 70 level, then its momentum is becoming unsustainable, particularly as it approaches the 80 level - it may be a good policy to trail a stop below each candle above the 70 level
Again a really strong trend can stay above the 70 level and retrace to rebound several times before it finally reverses - that's trading
But the majority of the time, the first retrace is signals the end of the trend
Downtrend
Opposite

Uses
1 New trends - breakouts and reversals - as above
2 Using various RSI levels as Support / Resistance for S/R trading
3 Using the RSI trace for trendline and pattern trading
4 Using RSI for divergence trading

As we have covered new trends already lets look at the others
RSI levels used as Support/Resistance
Drawing S/R lines on pure price action can be a bit subjective at times, as what may appear as important levels to one person may not be significant to others...........
Also trendlines must be drawn for each instrument we trade, and they may require updating at times........

Using RSI S/R levels will overcome this "problem"
Our RSI levels are 20, 30, 40, 50, 60, 70 and 80
These lines are used on ALL charts, thet never change
To reduce this number and help unclutter out charts, the 20 and 80 levels can be removed.
Remember once price goes above 70 or below 30 , we trail a stop below each candle
So we are left with just the 30, 40, 50, 60 and 70 levels
Try it, it works great - and we get early signals at least as good as pure price action

3 RSI trace for trendline / pattern trading
The RSI race which is basically a series of pivot hi's and lo's is ideal foe drwing trendlines and chart patterns - they often give early signals
Chart patterns in the RSI 40-60 range (congestion) are well worth looking for
Trendlines - the current trendline is the last pivot low that can be connected to the furthest away pivot lo withour passing thro the RSI trace etc etc

4 Divergence trading
Once we have our initial 2 pivot lo's or hi's to define our divergence with price - continue this line into the future to act as our trading trendline
Then use our trendline trading management to manage the trade, if price should
accelerate and trace a higher pivot lo (in an uptrend), then use this pivot low with the previous pivot low as your new trendline etc etc
The last two pivot lo's hi's is the current trend direction - use with discretion

The RSI works very well with cadlesticks and Bollinger Bands

Conclusion
The RSI indicator is very versitile and defies the often quoted GUROs??? who say indicators do not work or that they lag price
When used properly it can give a very good indication of the price action to come

I hope the above ramblings, they are probably a bit disjointed, make sense and be of help to some traders

Time for dinner, no time to back check

Merry Christmas from Australia
Peter

PS I hope there are no errors