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Jonas Borchgrevink

A New Trading Strategy? Using RSI and Stoch to find Entry Points

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I started my CFD Journey on Thursday using a few rules that I created for myself. I’m now interested in trying to see if I can use RSI and Stoch in combination to create an even better trading strategy for myself. My previous rules were:

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  1. Only risk max 2% of my bank roll per trade.
  2. Have 0 active positions during the night (first of all, I lose sleep, second; you are charged an interest fee for leaving a leveraged product overnight.)
  3. Always trade on last month’s trend including the previous day(s). If they do not correlate, I will not trade.
  4. If one position is lost, I’ll double the amount (martingale) and do a second trade. I’ll only stop doubling after 3 consecutive losses.
  5. Do not think about lost trade opportunities.
  6. Markets to trade: Dax & Dow (minimum spread).
  7. Stay updated on economic releases prior to entering a trade.
  8. Do not have emotional ties to the money. I like to call them “points”.

Trend following has proven (historically) to be the most sound way to trade any asset. It’s indisputable. However, for CFD trading I never want to leave a trade overnight due to interest fees and sleep. It can be hard to do trend following when you have to be in and out of a trade quick. I got an idea today to try and use RSI and Stoch in combination to find the best entry points for my CFD trading. And my ultimate strategy would be to include it with my number 3 rule:

Always trade on last month’s trend including the previous day(s). If they do not correlate, I will not trade.

In combination with my new RSI and Stoch rule:

Only enter a position when an asset is overbought or oversold shown by both RSI & Stoch at the same time.

What is RSI and Stoch?

The relative strength index (RSI) is a momentum indicator developed by noted technical analyst Welles Wilder, that compares the magnitude of recent gains and losses over a specified time period to measure speed and change of price movements of a security. It is primarily used to attempt to identify overbought or oversold conditions in the trading of an asset.

Many say that an asset with an RSI above 70 is overbought (and should be sold) or if the RSI is below 30 it’s oversold (and should be bought).

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The stochastic oscillator is a momentum indicator comparing the closing price of a security to the range of its prices over a certain period of time. The sensitivity of the oscillator to market movements is reducible by adjusting that time period or by taking a moving average of the result.

Asset with a stoch showing above 80 is considered overbought, and if the asset is showing less than 20 it’s considered oversold.

My mini experiment with the Dax 30 Minute Timeframe

Below is the first crossover I found where RSI and Stoch is correlating going back a few days on the Dax index. Both give a buy signal when the indicators cross their lowest horizontal lines. Then I found out that if I were to sell when either one of the indicators crosses the overbought territory I would be able to Take Profit.

Looking at the Dax index back to January 17th, I would have won six trades and lost two trades based on this strategy alone (RSI and Stoch with a 30 min timeframe). If I were to implement it with my trade following rule, I would have initiated 0 trades during this period (where both the intraday trend and the monthly trend is correlating.) I’m not sure if I’m going to follow these rules by the book, but I’m definitely going to experiment with them the following week and give you an update in my posts.

Have you tried this before? Submit a comment below and let me know how it worked for you.

My trading rules are now updated to:

  1. Only risk max 2% of my bank roll per trade.
  2. Have 0 active positions during the night (first of all, I lose sleep, second; you are charged an interest fee for leaving a leveraged product overnight.)
  3. Always trade on last month’s trend including the previous day(s). If they do not correlate, I will not trade.
  4. If one position is lost, I’ll double the amount (martingale) and do a second trade. I’ll only stop doubling after 3 consecutive losses.
  5. Do not think about lost trade opportunities.
  6. Markets to trade: Dax & Dow (minimum spread).
  7. Stay updated on economic releases prior to entering a trade.
  8. Do not have emotional ties to the money. I like to call them “points”.
  9. Only enter a position when an asset is overbought or oversold shown by both RSI & Stoch at the same time.
Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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3 Comments

3 Comments

  1. thengtiger

    January 29, 2018 at 12:09 am

    Yes I’ve tried it. I use the Bollinger curves to plot a predictable upper and lower limit. Then when the stoch and RSi cross each other, I look at the Bollinger to see if it is close to the bottom or the top of the limits, as it’s about to go the other way. If it’s at the bottom, I buy. If it’s at the top, I sell.

  2. dopezone

    January 29, 2018 at 9:09 pm

    Can you enlighten point 3? It’s unclear to me.

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Jonas Borchgrevink

Money Making Course Now Available: Discount for Hacked.com Members

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I’ve spent most of my time this spring creating an online course on MoneyMakers.com. The course explains how I personally have built wealth and how I have succeeded with my businesses (CCN and Hacked). This course is going to evolve over time, and I hope MoneyMakers will become a large network of people that are focused on becoming financially independent. The course on MoneyMakers.com is specially designed for Hacked.com members. It’s not a tutorial on trading, nor on cryptocurrencies, but a tutorial on proven methods to gain wealth, including entrepreneurship and investing.

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I do not preach bullshit, the course on MoneyMakers will give you hard facts. Facts that can change your own life. Building wealth takes time, so be prepared to have a long time horizon.

MoneyMakers and Hacked go hand in hand. MoneyMakers as an in depth course service, Hacked as a community and provider of exclusive information. The course offers a free trial of the first chapter, and all Hacked members can get a 25% discount by signing up with the discount code “hacked25”.

If you enrol in the course, I would be very happy with feedback on the content so I can improve it. And of course, if you are unhappy with the course I will refund you the entire course fee, no questions asked!

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I will continue to create synergies between MoneyMakers and Hacked.com, and soon we will host events where you are all invited.

Possibilities for Hacked Members:

  1. Are you an expert in your field? Do you have a proven way on how to make money? I will allow experts to create their own courses on MoneyMakers.com and set up a shared revenue deal.
  2. Have you taken the course on MoneyMakers.com and want to become an affiliate? Email me!

You can reach me on jonas.borchgrevink@hacked.com or jonas.borchgrevink@moneymakers.com.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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1 vote, average: 5.00 out of 51 vote, average: 5.00 out of 51 vote, average: 5.00 out of 51 vote, average: 5.00 out of 51 vote, average: 5.00 out of 5 (1 votes, average: 5.00 out of 5)
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CFD

My CFD Journey: Bringing it in Again

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I’m back into the groove. I’m way more patient now, looking for the right entry levels. I’m not jumping into a position like I did before. I’m taking less risk, and having more winning trades. I have an inner conflict with myself, a part of me wants to make a lot of money very fast, and another part of me wants to make less money with less risk. My end goal is to have a CFD-strategy that works over a longer period of time, as long as I make money, anyone should be happy, right?

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My results

Order Entry Price Take Profit Stop Loss USD Bank Roll USD % of Start Cap.
Start 258 064,52
Day 1 25.01.2018 Dax Buy 13268 13274 13262 6 472,52 264 537,03 2,51
Day 2 26.01.2018 Dax Sell 13342 13318 13392 7 642,84 272 179,87 5,47
Day 3 29.01.2018 Dax Buy 13331 13336 13313 12 508,39 284 688,26 10,32
Day 4 30.01.2018 Dax Buy 13226 13233 13176 6 625,94 291 314,19 12,88
Day 5 31.01.2018 Dax Buy 13217 13230 13187 26 474,06 317 788,26 23,14
Day 6 01.02.2018 Dax Sell 13291 13265 13327 10 834,58 328 622,84 27,34
Day 7 02.02.2018 Dax Buy 12797 12825 12772 72 314,97 400 937,81 55,36
Day 7 02.02.2018 Dow x x x x −340 000,00 60 937,81 −76,39
Day 8 05.02.2018 D&D x x x x 353 333,33 420 000,00 62,75
Day 9 06.02.2018 D&D x x x x 236 933,20 656 933,20 154,56
Day 10 07.02.2018 D&D x x x x 278 933,47 935 866,67 262,65
Day 11 08.02.2018 D&D x x x x 212 533,33 1 148 400,00 345,01
Day 12 09.02.2018 D&D x x x x 272 266,67 1 420 666,67 450,51
Day 13 12.02.2018 D&D x x x x 171 240,00 1 591 906,67 516,86
Day 14 13.02.2018 D&D x x x x −705 240,00 886 666,67 243,58
Day15 14.02.2018 D&D x x x x −481 600,00 405 066,67 56,96
Day16 15.02.2018 D&D x x x x 86 933,33 492 000,00 85,99
Day 17 16.02.2018 D&D x x x x −198 666,67 293 333,33 13,67
Day 18 19.02.2018 D&D x x x x 80 000,00 373 333,33 44,67
Day 19 21.02.2018 D&D x x x x 83 866,67 457 200,00 77,17
Day 20 22.02.2018 D&D x x x x 98 666,67 555 866,67 115,40
Day 21 23.02.2018 D&D x x x x 58 666,67 614 533,33 138,13

And my stats

Lol.. Look at this trading day. 522,025 NOK gained, 5,110 NOK lost. If this happened to me everyday, I would be very happy.

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Now I just hope I don’t enter any trades later today just to destroy these nice stats.

Have a nice weekend, and let’s see what the next week might bring.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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7 votes, average: 4.57 out of 57 votes, average: 4.57 out of 57 votes, average: 4.57 out of 57 votes, average: 4.57 out of 57 votes, average: 4.57 out of 5 (7 votes, average: 4.57 out of 5)
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CFD

My CFD Journey: Taking it slower, bringing in the profits

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I’m way more careful now, I monitor the market and play mind games. What if I had bought at this level? Then I wait and watch what happens with the price. Most of these games have been profitable, so if I only had entered them I would have made much more today. But this is about learning, take it easy, and ensure more profits than losses.

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My Results

Order Entry Price Take Profit Stop Loss USD Bank Roll USD % of Start Cap.
Start 258 064,52
Day 1 25.01.2018 Dax Buy 13268 13274 13262 6 472,52 264 537,03 2,51
Day 2 26.01.2018 Dax Sell 13342 13318 13392 7 642,84 272 179,87 5,47
Day 3 29.01.2018 Dax Buy 13331 13336 13313 12 508,39 284 688,26 10,32
Day 4 30.01.2018 Dax Buy 13226 13233 13176 6 625,94 291 314,19 12,88
Day 5 31.01.2018 Dax Buy 13217 13230 13187 26 474,06 317 788,26 23,14
Day 6 01.02.2018 Dax Sell 13291 13265 13327 10 834,58 328 622,84 27,34
Day 7 02.02.2018 Dax Buy 12797 12825 12772 72 314,97 400 937,81 55,36
Day 7 02.02.2018 Dow x x x x −340 000,00 60 937,81 −76,39
Day 8 05.02.2018 D&D x x x x 353 333,33 420 000,00 62,75
Day 9 06.02.2018 D&D x x x x 236 933,20 656 933,20 154,56
Day 10 07.02.2018 D&D x x x x 278 933,47 935 866,67 262,65
Day 11 08.02.2018 D&D x x x x 212 533,33 1 148 400,00 345,01
Day 12 09.02.2018 D&D x x x x 272 266,67 1 420 666,67 450,51
Day 13 12.02.2018 D&D x x x x 171 240,00 1 591 906,67 516,86
Day 14 13.02.2018 D&D x x x x −705 240,00 886 666,67 243,58
Day15 14.02.2018 D&D x x x x −481 600,00 405 066,67 56,96
Day16 15.02.2018 D&D x x x x 86 933,33 492 000,00 85,99
Day 17 16.02.2018 D&D x x x x −198 666,67 293 333,33 13,67
Day 18 19.02.2018 D&D x x x x 80 000,00 373 333,33 44,67
Day 19 21.02.2018 D&D x x x x 83 866,67 457 200,00 77,17
Day 20 22.02.2018 D&D x x x x 98 666,67 555 866,67 115,40

 

I’m way more succesfull with the trades I enter, out of 25 trades, 21 are winning trades and 4 are losing trades.

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The best way to make money, is to ensure that you don’t lose money. That’s something I’m focusing on more now rather than large gains and high risk.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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