Trading Strategy: Dynamic RSI
The Dynamic RSI system is used for swing trading on stock market indices and stocks. It is a strategy shows relatively few signs. Dynamic RSI was designed by a Dutch analyst.
Given that signals rather rare and that there is a wide range of indices and stocks must work, it is advisable to work with a scanner. WHS Tech Scan scans every day all stocks, indices and forex pairs and scans including Dynamic RSI signals.
Trading system rules
e RSI is an oscillator. An oscillator measures the speed and strength of price movements. If a price movement extremely fast and powerful, the RSI is above certain thresholds will rise or fall. These thresholds have been called overbought and oversold.
The classic RSI has two drawbacks. Firstly, the indicator does not take into account the intrinsic volatility. Secondly, the overbought and oversold static thresholds. The Dynamic RSI solves this by creating dynamic thresholds. The thresholds thus to adapt to the market and the underlying financial instrument. In this screenshot you can see clearly the difference between the classic RSI with fixed thresholds and the Dynamic RSI with dynamic thresholds.
Decreases the Dynamic RSI below the lower threshold, then the instrument is sold over-. A rate increase is possible. Dynamic contrast RSI rises above the upper threshold, then the instrument is over-bought. A price reduction is possible. Opening a position does not happen immediately when the price goes through the threshold. Only when the Dynamic RSI back in the other direction by the threshold is, the position is open.
This screenshot shows two short sell signals (1, 4) and three buy signals (2, 3, 5). The position is only open when the Dynamic RSI back in the other direction by the threshold goes. This is indicated by the circles.
Attention. Some traders filtering Dynamic RSI signals. They open only when the signal is a position in the direction of the trend. Buy signals if the market is bullish, short sell signals when the market is bearish. To determine the trend they usually use: a 3 Line Break chart.
When to close a position?
As is often the case with any strategies designed by analysts, there is no specific information about the determination of target and stop for the position. In this case, there can then be worked best with a target stop, and the day on the basis of ATR (average true range).
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Forex is simple follow the trend and you will rich.
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