Thanks a lot @Entropy, delighted to have somebody with your experience around to bounce off of . Be prepared for me picking your brain on occasions.
No problem! Happy to answer questions
In other words, If I get almost all those factors into consideration for a trade, I’d be looking for 1-2 daily trades right? uhmm darn
Typically i only take 3-5 trades in a 6 hour window, max but a lot of my trading is algorithmic - I do some manual trading but its very defined. You want quality over quantity. Plus you want to keep commissions and overheads low. They eat into edges.
Hi guys I’m slowly learning to trade, although starting with tiny amounts to see if I fail!
When you say RSI crosses, do you mean when it crosses the dotted line on the top or bottom on tradingview or similar? What does that line signify, obviously the further up the more overbought and vice versa, but what does crossing the line mean?
Also, I have the default setting on my RSI, a length of 14. Is this the one you guys use?
14 length is the look back. How many bars does it look at the generate the oscillation in the values? 14 is the default. There is no right answer. Just try things and what you feel works.
The crosses of a line is just a threshold or upper/lower extremity for mean reversion. These values are guides. Ie if the rsi moves from overbought and crosses the line downwards they said that’s a “sell” signal. Obviously you need to add chart context in addition to this. Make sense?
Thanks for explaining yeah it makes sense
Why is it a sell signal when it crosses downwards not when it’s up? Just a confirmation that it’s been overbought and now people are selling?
Crossing upwards is saying it was moving from an area of ‘normality’ (wherever you define that - usually between 20-80) and into an area of overbought. Its just a signal saying its moving into that overbought range. It can remain up here for a long time though…ive seen markets do wild things.