I tested 3 commonly taught ways to trade the Relative Strength Index (RSI) indicator and show you which ones actually give traders an edge.
Part 1 of this series: https://www.tradingheroes.com/rsi-indicator-explained/
Part 2 of this series: https://www.tradingheroes.com/rsi-trading-strategy-plans/
When you learn a RSI indicator trading strategy from a blog or forum, how do you know if it really works or not? The first step is to backtest it. Testing it will give you hard data on if it has a statistical advantage.
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Before we get started, remember the Trading Heroes Keys to Backtesting Success:
1. Never trust what you read on the internet about trading strategies. What works for another trader may not work for YOU. So always test strategies for yourself and get hard data.
2. Always test your trading strategies before risking real money.
3. Past performance does not guarantee future results. But successful trading is based on recognizing repeating patterns, so testing is essential to success.
4. If your return with one strategy does not meet your goals, remember that you can add: markets, timeframes, pyramiding and/or more strategies. Don't give up on a consistent strategy just because the return is low.
5. One little tweak in a trading plan can change it from unprofitable to profitable. So test different ideas.
6. Trading strategies are easy to learn, but hard to master. You need to put in the work: testing, screen time, journaling and reviewing.
7. Consistently profitable trading is an extremely valuable skill. If you can master trading, there's always the potential to trade other people's money (OPM). Don't give up just because you think that you don't have enough money.
8. Your live trading results may vary from your testing results. Part of the learning process is to figure out why.
9. You are 100% responsible for your trading results. These testing results do not guarantee success.
#rsi #tradingstrategy #relativestrength