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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:

  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).

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

Limited Time: Free Network Access for Hacked.com Members

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We have decided to migrate from Workplace to Mighty Networks at https://network.ccn.com/. This network will be a pay-to-enter network at $9.99 per month, however – since Hacked.com members originally got free entrance to our Hacked.com community using Workplace, we will give all Hacked.com members free entrance the first 7 days. If you create an account within next Monday, you will have free access to the network for as long as we operate it.

Mighty Networks is better at fostering discussions and connections, that’s our main reason for migrating. We will close Workplace during the next few weeks.

I believe the network will become as powerful as our current network on Workplace, and hopefully even better.

If you have any questions or concerns, please let me know in the comment field below.

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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Jonas Borchgrevink

Q&A With Jonas Borchgrevink: The Money Makers Club

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The Money Makers club launched this past Friday with 10 members. We have a quite diverse membership base with individuals from the following sectors:

  • Health Care
  • Real Estate
  • Shipping
  • Investments
  • 3D Printing
  • IT

Our members are located in Asia, Europe and in the US. Since we got that many interesting members, we are now starting with a special Q&A of all members, starting with me on Thursday. This will be a live Google Hangout where members in the Money Makers Club can get to know me and my projects.

We have opened up for 15 more members in the Money Makers Club, and there are still 13 available seats if you are interested in joining the club.

We will start to host events this coming fall/winter, where all will be invited including Hacked.com members.

If you want to join the Q&A and the Money Makers club, please click here.

I’m going to be more active on Twitter and I welcome any discussions there. You may also add me on LinkedIn.

Hope to see as many of you in the Q&A on Thursday.

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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Jonas Borchgrevink

the Money Makers Club: 15 New Spots Available

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Tomorrow we are launching the Money Makers Club as an exclusive club for personal and business related goals. We filled the 10 initial spots quick in the beginning of June. We are now 10 members with a combined net worth of $24 million and a yearly income of $4 million USD. The members are from Europe, US and Asia. When that is said, this was a high net worth group that initially joined, but we welcome everyone that want to create connections and support each other.

The next intake has now been activated and we are looking to fill 15 new spots by July 1st. Here is a look at our network that will launch tomorrow:

You can find the network on network.moneymakers.com. If you want to learn more about the Money Makers Club click here.

The price per membership is now $1095 per year and you can secure your spot by purchasing it on Hacked.com, click here. You will still have access to all the content on Hacked.com by upgrading your membership.

Events coming up

We have been invited to some awesome events in the fall of 2018 and we are working on the details. Once Money Makers reach 100+ members, we will start to host our own events and online sessions. Stay tuned for more information.

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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