2007issue C061-4
Lock a followable rule set before testing RSI exits
A plan-free contrarian stance can reverse same-day gains when a trader re-enters after an initial bounce. The archive then replaces borrowed discretion with researched, followable rules, including a ranking-based entry and a two-period relative-strength-index exit.
- A discretionary, plan-free contrarian re-entry after an initial bounce can reverse same-day gains in a crash session.
- Copying another person's discretionary system fails unless the rule set matches personality, holding period, and the ability to execute.
- Daytrading, swing trading, and longer-horizon investing differ by how much news or earnings the trader needs and by whether frequent setups can be taken.
- One disclosed procedure pairs a ranking plus a next-day percentage offset with a five-day moving-average exit or a two-period relative-strength-index exit.
A plan-free bounce can reverse the day
A discretionary, plan-free contrarian stance can produce large reversals of same-day gains when the trader re-enters after an initial bounce during a crash session. After plan-free floor trading, the corrective lesson is to reframe the market as a current to move with, rather than an opponent to defeat.
Quantified pullbacks are not a fight with trend
Buying pullbacks inside an intermediate-to-longer uptrend, and selling rallies inside a downtrend, is described as a systematic, rule-quantified form of apparent contrarianism rather than fighting the dominant trend. The archive states that most traders lose money, a smaller share break even, and only a small minority are consistently profitable. That minority's edge is attributed to researched, backtested rules a trader can follow when discretion fails. Backtested here means a historical simulation of a fully specified rule set over a stated sample, used as confidence for following the same rules live.
Copied systems fail without a personality match
Copying another person's discretionary system is treated as a primary failure mode unless the rule set matches the trader's personality, holding period, and ability to execute. A trading-psychology-process converts the trader's time horizon, trigger comfort, and execution constraints into a single testable set of entry, exit, and no-trade rules. The trading-systems-decision-process is the end-to-end sequence of matching a system to the trader, specifying rules, and executing only when those rules are clear.
Horizon and venue follow the trader
Daytrading, swing trading, and longer-horizon investing are distinguished by how much news or earnings information the trader needs and by whether the trader can pull the trigger on frequent setups. Under a systematic approach, equities, commodities, forex, and e-mini futures are treated as interchangeable venues once risk parameters and contract or share size are adjusted and only clear, concise setups are taken.
A ranking entry and a relative-strength-index exit
One disclosed entry procedure combines a short-term directional ranking with a next-day buy placed a stated percentage below the prior close, then exits when price crosses above a five-day moving average. That rule-based entry is a predefined condition that fires a buy or sell only when a specified market-state threshold is met. A second disclosed exit fires when a two-period relative-strength-index closes above 75, with the exit taken on that close or the following open. The relative-strength-index is a bounded oscillator computed from a defined lookback of closes, and a two-period close above a high threshold can serve as that exit trigger.
Sizing keeps weak holdings from dominating
Position sizing, contract or share variation across names, and diversification across multiple positions are presented as the money-management layer that keeps one or two weak holdings from dominating results.
All readings on this track · 26 readings
- 1991Constructing the relative strength index from seed and recursive averages
- 1991Inverting relative-strength-index closes for same-session rules
- 1991Seeded averages and the recursive-update
- 1993Restating relative-strength-index parameters after a smoothing change
- 1993Relative momentum construction by stretching the relative strength lookback
- 1994Constructing relative strength index lookbacks, bands, and confirmation filters
- 1994Building the relative-strength-index from signed close changes
- 1997Constructing the relative strength index as a bounded up-down close oscillator
- 2002Four-line oscillator construction for rule-based entries
- 2004Assembling a bounded RSI path
- 2004Constructing RSI on highs, lows, and reverse targets
- 2004Reverse-engineered RSI as an explicit next-bar price target
- 2006Self-adjusting RSI thresholds from the oscillator's own spread
- 2006Constructing adaptive overbought and oversold levels for a relative strength index
- 2006Relative Strength Index 50-line entry beyond the 70 and 30 extremes
- 2007Lock a followable rule set before testing RSI exits
- 2008RSI bands as a one-day shift of reverse-engineered levels
- 2008Constructing an asymmetrical RSI from adaptive up and down averages
- 2010Building a bounded oscillator from a rainbow smoother, relative strength, and inverse Fisher
- 2011Two-horizon weekly RSI with moving averages and stops
- 2011Percent-offset simple moving average bands with relative-strength confirmation
- 2011Fast and slow relative strength index as one mechanical rule book
- 2011Price-zone oscillator construction from signed closes
- 2015Constructing a zero-lag oscillator against a relative strength index baseline
- 2015Relative Strength Index as a baseline in 2015 software listings
- 2018Building a Fisherized deviation-scaled oscillator