Considerations about "RSI Rollercoaster" trading strategy.
The RSI rollercoaster in my opinion is one of the safest trading strategies, because combines a clever use of the stop-loss at points that guarantee receiving a good percentage in profit. It is particularly good when you do middle term trading, and you have regular jobs which impede being in front of the charts regularly.
Nevertheless there is one situation about the RSI rollercoaster that I do not no how to handle:
Lets suppose that you take a long position on any symbol, using the criteria of identifying the upward crossing of the K line with 20.
You go long at 10000, considering a stop loss at the pivot point (9500), and selling half of your position at 10000+50% of your risk.
Possible outcome 1: first target of 10000+50% of risk is not met, and the value of the share starts going down. In this case the stop loss will protect your position making you going short again, in case the trend continues being bearish.
Possible outcome 2: first target of 10000+50% of risk is met, and the share continues going up, in this case you liquidate half of you position at targe and increase the level of your stop loss to breakeven. Then go short after the RSI has a downward crossing with the 80 level.
Possible outcome 3: First target is meet, wich means that you sell half of your position, but then the share goes down up to the break-even point. At this stage, you liquidate all of your shares, but in a market that you expect to be bullish.
The question is, in a situation like outcome 3, How to enter again to the market?, how to define the strategy to enter back again?
I will just keep studying to try to identify patterns, but all comments are welcome.
Nevertheless there is one situation about the RSI rollercoaster that I do not no how to handle:
Lets suppose that you take a long position on any symbol, using the criteria of identifying the upward crossing of the K line with 20.
You go long at 10000, considering a stop loss at the pivot point (9500), and selling half of your position at 10000+50% of your risk.
Possible outcome 1: first target of 10000+50% of risk is not met, and the value of the share starts going down. In this case the stop loss will protect your position making you going short again, in case the trend continues being bearish.
Possible outcome 2: first target of 10000+50% of risk is met, and the share continues going up, in this case you liquidate half of you position at targe and increase the level of your stop loss to breakeven. Then go short after the RSI has a downward crossing with the 80 level.
Possible outcome 3: First target is meet, wich means that you sell half of your position, but then the share goes down up to the break-even point. At this stage, you liquidate all of your shares, but in a market that you expect to be bullish.
The question is, in a situation like outcome 3, How to enter again to the market?, how to define the strategy to enter back again?
I will just keep studying to try to identify patterns, but all comments are welcome.
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