How I trade with only the 2-period RSI -- with David Moadel
hey everybody welcome to looking at the markets with David Modell Happy
Thanksgiving I'll tell you what I'm thankful for I'm thankful to you guys
and gals who have been clicking on my sponsored or promotional videos I really
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thanks a lot all right so I found this I'm always looking for different
articles and unusual strategies and I like to bring them to you guys and gals
and I just had to click on this title because it's it's unusual how I trade
with only the two period RSI I was like wow only the two period RSI okay all
right and I'll put a link in the description below this video to this
article and you might agree with it you might disagree with it so I want to get
your comments you know what do you think of this one but that that's a really
click where the title huh all right just the two period RSI by itself is a
really interesting choice I mean that's the one that that goes up down up down
up down you know it moves so so fast I mean the standard default setting for
the RSI is usually 14 period right for most platforms and they choose that
because it's not too fast not too slow it gives you you know buy and sell
signals but not too many not too few it's it's kind of just right really or a
lot of people think so at least the two period is is kind of extreme right but
okay that's what this says and I'm curious and I want to bring it to you so
how I trade with only the two period our site let's see what you think first
there is this interesting quote here see if you agree with this one even though
we do not suggest using only one indicator if one had to the two period
RSI would be the indicator that's a really interesting quote I don't know if
I would agree with that I mean the two that's yeah that seems kind of extreme
but okay all right that's how they feel I guess so all
right let's let's look at the strategy let's see if you agree that it's good or
not good I'm just gonna focus on the long setup for now again if you want to
read the whole thing just click on the link below in the description below this
video you know I I'm not being paid to do this this is just something I'll
bring it to you alright so the long set up all right here's how they're claiming
to do this you wait until the two period RSI falls below five which sounds like
an extremely low reading but remember it's remember it's the two period RSI so
it it's gonna go below five sometimes probably it's it swings pretty wildly
and they have a picture here to go with it in the article here so yeah here's
the five going up down up down very frequently and here's the example
alright so here it is the RSI two period going below five barely but it did
alright and so that's the first thing you wait for you don't do anything yet
you're just watching okay and when that happens you want to take note of the
most recent high point all right the the swing high as they call it
alright so you know make a note of the most recent high point on the chart and
then draw a line okay draw a horizontal line into the future here alright for
reference cuz you're gonna use that again all right so okay wait until it
goes below five and then make note of the most recent high point including the
wicks of the candles alright so and draw that line alright so what's next now you
wait until the price breaks above the higher swing high that formed just
before the RSI signal confirmation of bull train in other words alright so
after after this now you wait until the candles Pierce above the most recent
high point basically I think is what they're saying that's my interpretation
so it did hear the wick of this candle here broke above that recent swing high
the high point of it okay so it did it don't do anything yet you're still just
watching alright and then you wait until the RSI to period goes below five again
for a second time after it breaks above that
recent hi there all right and there it is - period RSI drops below 5 again and
you still don't do anything yet now you wait for a bullish move all right
you buy on the break of the high of a bullish bar that's kind of a vague
phrase there I don't know the break of the high of a bullish bar does that mean
a big green candle or a big gap up not sure exactly what that means here's how
I would probably play this I'm gonna put my own spin on this or or my own
interpretation or alteration of it I would probably wait until it breaks up
clearly candle breaks above that same line that that same previous high you
know which it seems to have done here at least with the wick more clearly more
clearly here with this candle I mean that's a definite confirmation of a bull
trend for sure interestingly in the article there they've got an arrow
pointing to this bar so I guess maybe they would have bought on this bar again
hard to say I'll let you read the article for yourself if you want to
links in the description below this video if they bought here I don't know
if this is confirmation of a bull trend after four red candles I'm kind of
skeptical of that but then there was a big gap up and then it broke above that
line and just kept on going so obviously it worked in this example I would not
count on this working 100% of the time but it's an interesting idea if it were
me I would wait until probably this candle I would wait until it broke above
this line here because this line was resistance you know the candles you know
it hit their head once fell down hit its head again twice fell down and then BOOM
above it clearly clear break above it closes above it and so as technicians
like to say the line that was resistance now becomes support after it breaks
clearly above it right and so now it's a support level
and it just kept going so that's how I would play it but they they drew an
arrow to this candle and again I'll read the description to you by on break of
the high of a bullish bar I'll let you interpret that how you will and I'm
curious what you guys and gals think of this strategy if you're if you're able
to back test it go for it more information is always a good thing
I do not recommend using any strategy until you forward test it as I like to
call it meaning demo trade it for a while and then find out whether it's
really working for you and even then if you're going to use it commit only very
small amounts of capital to it at a time just to make sure that you're seeing
staying safe respect your stop losses all the safety precautions should be in
place with any any strategy this one or any other one that I ever discuss ever
okay so what do you think of this one interesting okay yeah
it is only using the RSI to period I mean so you think using other stuff to
not other indicators but you know kind of a support and resistance line kind of
sort of thing is in there so it's using the price action as well so it's not as
simple as just the RSI to period there are other factors in play here I think I
could be wrong so there you go anyway I hope you enjoyed that for Thanksgiving
there's your Thanksgiving gift I guess if you choose to use it alright let me
know in the comments below you know what do you think of this one is it is it
good you like it do not like it I'm kind of neutral on it but it is interesting
as an idea to test out and thank you again this is you know on Thanksgiving
you're supposed to say what you're thankful for I'm thankful first of all
for getting 40,000 subscribers that's fantastic thanks a lot everybody and
thanks for again I'm gonna put out a couple of sponsored videos to help pay
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I really appreciate it alright have a great holiday don't eat too much stay
safe I'll talk to you again soon