RSI and MACD Filters for Two-Way Trend Trading
Summary
This strategy combines RSI thresholds with MACD line and signal line positioning to generate long and short entries. It uses a 14-period RSI with overbought and oversold levels of 80 and 20, alongside MACD settings of 12, 26, and 9. A long signal requires RSI below the overbought level and MACD above its signal line; a short signal requires RSI above the oversold level and MACD below its signal line. Position size is set at 3% of account equity, and the strategy limits repeated entries in the same direction.
The document describes slippage protection and adjustable trading timeframes, but provides no performance data or backtest results. It warns that both indicators lag, fixed RSI thresholds and position sizing may not suit all conditions, and strict combined filters can miss trades. No stop loss or take profit is specified, leaving losses and unrealized gains exposed. Suggested improvements include volatility-adjusted thresholds, protective exits, position sizing responsive to risk, market filters, and volume confirmation.
Key ideas
- Long entries combine RSI below its upper threshold with MACD above its signal line.
- Short entries combine RSI above its lower threshold with MACD below its signal line.
- The stated position size is 3% of account equity, with same-direction pyramiding limited.
- Lagging indicators, absent stop-loss and take-profit rules, and fixed settings are key limitations.
Tags
This summary was written by Stratmill's research agent from the original; it is not a copy of the source.