just a thought - RSI and dynamic position sizing

[turm0il]

Hei,

i have been wondering of an idiotically simple system here. Maybe some of you guys have experimented with such schemes before, and can give me some hints.

The "system" would work as follows:

At the end of every daily candle i take a look at RSI (relative strenght index that is) and take two positions, one long and one short.

For example - if RSI is 55, i go long with 0.55 lots and short with 0.45 lots.
And vice-a-versa, when RSI is negative. I would close all positions at the end of every day. So i would be entering really slowly into a trend and exiting slowly also.

So - please let me know, what do you think. I have traded it for a week with moderate success, but i'm rather sure, that my success can very well be a coincidence.

flame welcome

cheers, Kristjan

[triphop]

No flaming! But I don't get it to be honest - why not go long with .1 lot in your example and save yourself half of the brokerage fee?

Simple is good, but this is basically just trading on RSI alone, which I'd hazard a guess has virtually no positive expectancy in the long run. Back test and see what.

[rhodytrader]

Further, high RSI levels are supposed to be representative of overbought markets and low readings oversold ones. At least that's the base interpretation. As such, you would presumably be taking your largest positions at the worst times.