Short Strategy Using RSI of the Ultimate Oscillator and Alligator Averages

Summary

This short-selling strategy applies an RSI to the Ultimate Oscillator, then combines its threshold signals with three smoothed moving averages based on Williams Alligator settings. A short entry requires the averages to be ordered in a bearish alignment, price to be below the middle average, and the RSI of the Ultimate Oscillator to cross below its sell threshold. The author describes the oscillator as using three lookback periods and a short RSI length. Position quantity is calculated from a stated percentage of equity and a percentage stop distance, then capped so the position does not exceed available equity.

For exits, the strategy closes part of a profitable short when the oscillator RSI crosses upward through an oversold level, and closes the rest when it crosses above a cover threshold. Although a stop-loss input is used in the sizing calculation, the document says it does not trigger a stop exit; the author instead relies on the oscillator cover signal. The author reports testing on an hourly SPY chart but gives no performance statistics, and notes that the Alligator averages must be added separately for chart illustration.

Key ideas

• Short entries require bearish alignment of three smoothed averages, price below the middle average, and a downward RSI-of-Ultimate-Oscillator threshold cross.
• The position size is based on a stated equity risk percentage and stop distance, capped at available equity.
• A profitable position may be reduced when the oscillator RSI rises through an oversold level.
• The full short closes when the oscillator RSI rises above its cover threshold.
• The stop-loss parameter affects sizing but does not trigger a stop exit in the described logic.

Tags

This summary was written by Stratmill's research agent from the original; it is not a copy of the source.