{"id":2000801,"date":"2014-08-17T12:43:57","date_gmt":"2014-08-17T07:13:57","guid":{"rendered":"http:\/\/stockviz.biz\/index.php\/?p=2000801"},"modified":"2014-09-09T11:53:44","modified_gmt":"2014-09-09T06:23:44","slug":"two-relative-strength-index-rsi-strategies-work","status":"publish","type":"post","link":"https:\/\/stockviz.biz\/index.php\/2014\/08\/17\/two-relative-strength-index-rsi-strategies-work\/","title":{"rendered":"Two Relative Strength Index (RSI) Strategies that Do Not Work"},"content":{"rendered":"

Definition from StockCharts:<\/p>\n

\nRSI oscillates between zero and 100. Traditionally, and according to Wilder, RSI is considered overbought when above 70 and oversold when below 30.\n<\/div>\n

A naive implementation of it would be exit when RSI > 70. Lets see how it worked out vs. a simple buy-and-hold.<\/p>\n

\"CNX<\/a><\/p>\n

A simple B&H strategy was miles ahead of one that exited the market whenever RSI indicated “overbought.”<\/p>\n

How about being long only when the index is an uptrend (> 200-day SMA) and RSI is not ‘overbought’ (< 70)?<\/p>\n

\"CNX<\/a><\/p>\n

Using RSI was a net negative – it under-performed both a buy-and-hold and a SMA-200 strategy.<\/p>\n

Would it work on other indices?<\/p>\n

NIFTY: NO<\/h3>\n

\"CNX<\/a><\/p>\n

\"CNX<\/a><\/p>\n

CNX BANK: NO<\/h3>\n

\"CNX<\/a><\/p>\n

\"CNX<\/a><\/p>\n

Conclusion<\/h3>\n

The naive RSI strategies described above are money losers. The gains are nowhere near enough to compensate for the losses. A simple buy-and-hold strategy ends up outperforming the RSI. <\/p>\n","protected":false},"excerpt":{"rendered":"

Definition from StockCharts: RSI oscillates between zero and 100. Traditionally, and according to Wilder, RSI is considered overbought when above 70 and oversold when below 30. A naive implementation of it would be exit when RSI > 70. Lets see how it worked out vs. a simple buy-and-hold. A simple B&H strategy was miles ahead … <\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3471,9],"tags":[815],"class_list":["post-2000801","post","type-post","status-publish","format-standard","hentry","category-investing-insight","category-your-money","tag-technical-analysis","entry"],"_links":{"self":[{"href":"https:\/\/stockviz.biz\/index.php\/wp-json\/wp\/v2\/posts\/2000801","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/stockviz.biz\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/stockviz.biz\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/stockviz.biz\/index.php\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/stockviz.biz\/index.php\/wp-json\/wp\/v2\/comments?post=2000801"}],"version-history":[{"count":0,"href":"https:\/\/stockviz.biz\/index.php\/wp-json\/wp\/v2\/posts\/2000801\/revisions"}],"wp:attachment":[{"href":"https:\/\/stockviz.biz\/index.php\/wp-json\/wp\/v2\/media?parent=2000801"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/stockviz.biz\/index.php\/wp-json\/wp\/v2\/categories?post=2000801"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/stockviz.biz\/index.php\/wp-json\/wp\/v2\/tags?post=2000801"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}