just sent you a message, why have you not replied?
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This is one that can quickly be overlooked just because indicators can be so attractive. They’re seen as “easier/quicker” way to do things. The problem starts when people don’t even want to think about how each indicator works or what sort of data it actually presents. Of course, all of this is (unfortunately) from my own experience lol.
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For sure, all indicators are derivatives, but in fact all information we operate with could be deemed as derivative of initial data. For example, financial multiplies used to analyse and compare different business entities based on definite data from the company`s financial statements. Of course, multiplies are derivateves, but they create additional information that could be useful.
It does not mean that traders sould trust all idicators and make decisions based on them. At the same time, indicators are useful to provide trader with an additional confirmation of the pattern. Abovementioned RSI is good for reversal strategies. It also works well in connection with additional indicators like MAs Example of RSI-based strategy. Another point is that RSI itself works quite well on commodities, especially at 5M chart of Crude Oil (CL).
It could happen that such popular indicators will work just because many traderes belive them.
RSI is very popular and an indicator typically is as good as its’ popularity strategically.
Is this to be taken seriously - you’re saying an RSI indicator works especially well on a five minute timeframe for crude oil?
Also the attached study which you have linked in you above post looks at 50 trades per predetermined market cycle - that’s really not a big enough sample size to draw a conclusion from.
Anyway, good luck with your RSI or MACD or MA combination.
My colleague specializing in CL shown me that. Of course, his trading decisions are based mostly on fundamental issues, but RSI is used to make adjustments to the entry point as an additional indicator. For sure, anyone should just buy when RSI shows “oversold” and sell when the RSI shows the opposite. As any other indicator, it just allows trader to find the entry point with the best risk reward ratio.
Before that conversation I`ve used only VWAP and has something like a negative bias against all indicators except VWAP.
One important point - it was tested not on CL CME futures itself, but on crude oil ETFs.
In my mind RSI is also an adjustment to a larger strategy-it is very well described in the school of pips. that especially Indicators like RSI, Stochastik, MACD…should be used as a kind of filter for other signals- and that works pretty well!
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