Welcome to NexusFi: the best trading community on the planet, with over 150,000 members Sign Up Now for Free
Genuine reviews from real traders, not fake reviews from stealth vendors
Quality education from leading professional traders
We are a friendly, helpful, and positive community
We do not tolerate rude behavior, trolling, or vendors advertising in posts
We are here to help, just let us know what you need
You'll need to register in order to view the content of the threads and start contributing to our community. It's free for basic access, or support us by becoming an Elite Member -- see if you qualify for a discount below.
-- Big Mike, Site Administrator
(If you already have an account, login at the top of the page)
Reading a Spanish author book (Oscar Cagigas) I have came across an interesting idea:
The idea is to use a short time RSI adjusting the upper and low bands according to volatility. Instead of looking for crosses with the 30/70 bands we make these bands to be variables depending on volatility.
We calculate the bands this way:
w=1,8*StDev (RSI (5),5);
Long Crosing: Cross (Cross (RSI (5), 50-w)
w is a intermediate variable that calculates the 5 period RSI standart deviation and multiply it for a constant (1,8). We calculate the lowest band substracting to the medium line (50) the RSI volatility, and forthe upper band adding 50 to the volatility (scaling in for 1,8 in both cases). In this way when market is flat, volatility will be low and the bands will be closer to the 50 line. When volatility is increasing, w value increases and we will have a band dedecreasing... This way we avoid wrong signals.
Can anyone, please, moddify an RSI indicator using this information and share it with all of usuarios
Thank you!
Trading: Primarily Energy but also a little Equities, Fixed Income, Metals and Crypto.
Frequency: Many times daily
Duration: Never
Posts: 5,049 since Dec 2013
Thanks Given: 4,388
Thanks Received: 10,207
Interesting concept.
Wonder why they picked 1.8.
Assuming RSI output is normally distributed then 1.8 * Std Dev means you will be generating signals on the 3.6% of extremes.
