Simple 2 Period RSI Trading Strategy You Can Use Today

The RSI (relative strength index) is a popular trading indicator by J. Welles Wilder.
The RSI2 trading indicator is a change from the standard 14 period RSI to a 2 period that was brought to us by Larry Connors.
The other difference is the change in oversold and overbought levels:
Overbought is greater than 90 and the higher the better
Oversold is considered less than 10 and the lower the better
Larry Connors paired the RSI2 with the 200-day moving average which would focus on the long term trend of the instrument. This would be great for position trading style however we are going to use a short to medium term trend indicator setting.
- See more at: www.netpicks.com/rsi2-trading...
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FREE PRICE PATTERN GUIDE: getpricepatterns.com/
Download the free indicator blueprint: gettheblueprints.com/
Candlestick Reversals: getcandlesticks.com/

[@wellerdr]

I tried an RSI2 setting a year ago on my own - and discarded it. Since this video - I have used it successfully as a confirmation of my 78% win tested system - 15m timeframe (hard to achieve in real life). Its cut the losing trades down and my entries are better. The key for me was your statement in the video "Do not use in a trending market" (can't remember exactly what you said). Trend reversal signals don't work well in a "trending" market! Duh!!!! Thanks. Helpful video.

[@ThePkc77]

Yes..I changed RSI to 7 period in index .. Getting good results in sideways market..

[@ahmedasheed8276]

Trading has changed lots of lives but some people out there are been ignorant and scared to take the risk! In life we have to take the chances in taking risk to lead us to our success

[@realityinf5833]

I use only 2 period rsi with 1 down setting and 90 upside setting with Bollinger bands on one day chart. Good results

[@TeddyBunnyx]

I've been using the 2 period RSI setting on the ES for about 3 months and it works like a charm. I'm a scalper and when the RSI turns and is going the same way as the MA it's a high percentage trade to take 4 or 5 ticks on a 5 range chart. Thanks a lot!

[@Netpicks1]

Hey Gene. Congrats on the success.

[@douglascarlson9006]

Gene - I've been using RSI 2-90-5 for the past week with no MA ... just scalping using 30s candles on 1m trades ... hitting on about 64% of my trades ... Any thoughts on how can I improve my batting average? ... Thx, Doug

[@dmitrios9862]

Awesome video, this strategy works well. Combine it with the overall trend direction.

[@NickyQ]

2 Day Period RSI on the Weekly charts. I've found success when the RSI reads .05 or below. I'll put the stocks on my "On Deck" list and watch for it to hit support or near it. Either way, I'm averaging down as long as the RSI remains flat.

[@suavecito1999]

great video!

[@bobbychimeh1925]

Awesome video

[@Netpicks1]

I think it's a great way to objectively trade pullbacks. Thoughts?

[@UmairGamingutube]

NetPicks Smart Trading Made Simple I think it’s a decent strategy but is there a way to scan for these stocks?

[@Netpicks1]

I'm sure there is although you may have to make a custom scan. Check Finviz or Tradingview for some of their built in scans

[@mamad28darya42]

which time frame?

[@Netpicks1]

@@mamad28darya42 You'd have to test it out.

[@raymondbaloyi1318]

Thank you.

[@sundeepmalwiya8407]

What u said Is very true overbought and oversold condition remain in the market for a long time we need to have a trend filter 😢😢😢😢😢

[@fayazhussain4428]

Which timeframe is preferable ? However, 10 MA is for 15 minute chart ? Or we can use 34 EMA for 15 minute chart?

[@Netpicks1]

I could list out preferable timeframes but here is the truth: Without testing these variables, they'd be a guess based on nothing. You really have to do your testing.

[@vinayshingade8714]

👌 Nice video

[@Lucas-vj8rr]

i trade for 10yrs now and by far my fav is RS2 Upside set at 95 low 05 I wait till daily is at 5 and if hourly is also below 10 than i buy.I don't use it on stocks below 10 dollars

[@PratimDGupta]

What Moving Average do you use @luuk57?

[@nilayrachchh3371]

Hi bro? You used this set up for swing trading?

[@herbertsithole9256]

Very good strategy for pull backs, especially retests

[@Netpicks1]

Glad you liked it!

[@abiolaariyo2793]

Nice video, am highly motivated. But my question is, can this strategy be used in trading Binary options trading?

[@Netpicks1]

I have no idea. I have never ventured into Binary options. Test it out and see. :)

[@trevonedupree7969]

I find this to work good on the 1 min

[@diamondhotline6400]

I am confused about the time frame . If the price on daily chart is above 200 ma , but on 5 min or 15 min charts is bellow 200 ma, Which way you would trade it? Would you play on the short side or you respect daily time frame which is bullish?

[@Netpicks1]

All you are seeing is a pullback against the higher time frame uptrend (as determined by the moving average). You can look to trade a reversal back in the direction of the daily and that reversal may happen BEFORE the lower time frames cross over their 200 ma. That said, I would not use the daily chart trend for a 5 minute chart. Think factor of 3-5. Taking trades on a 5 minute chart...think 30 minute trend.

[@jafxtradinginstitute6395]

M5 trade the H1 trend .

[@ani784]

For Intraday candle frame should be??????.

[@Netpicks1]

That will be up to you. Some use 3 minute..some use 15.

[@obiwan5003]

🤓 **Out of curiosity, I see you use the 34-EMA, any particular reason why you do so?...* *Because I think the original method is 5-EMA*

[@Netpicks1]

The original method by Connors used the 200 period moving average. The concept is no different regardless of the length of the average.

[@HimanshuGupta-bc3jy]

sorry i am not that greate in englishh ... so cant catch up ur english ... in ur this video u mean to say buy when its pure oversold and sell on overbought ? is that what u mean plz tell

[@Netpicks1]

You'd not want to trade based only on an oversold/overbought condition. You can look for a trade and a trigger but imho, you need other supporting factors instead of only an indicator

[@rockyrashidi4329]

ive seen the same strategy with 200 MA + 5 MA and rsi-2 . It was said if price above 200, and price under 5 MA+over sold, you go long. If price below 200 MA, and price above 5MA+over bought then you go short. Thoughts? hows yours different?

[@Netpicks1]

Different strokes. Long term trend - price under 5 would be a way to objectively determine a pullback - oversold is probability of move up.

[@MauiChristian90]

Have you tried using the RSI 0-100 levels on the main price chart and using price as your indicator instead of the RSI Level? I use the RSI Laguerre. Turned the levels of 0-20, 20-38, 61-80, and 80-100 into clouds. Then applied it onto the main price chart itself using the price movement as my “RSI” line. And all applications are the same. Using the 1hr, 2hr, 4hr, or daily to see the overall trend of the underlying for the week and using the 2min,5min or 10 min chart for entries.

[@Netpicks1]

Sounds like an interesting approach.

[@MauiChristian90]

NetPicks Smart Trading Made Simple yea stumbled upon by accident messing with placements on certain indicators on TOS. Now just using Regular RSI as a divergence indicator. Paired up they work well together

[@sudhakarp598]

Sir, please suggest me, can we purchase between 45 and 50 of RSI and sell between 55 to 50 of RSI?

[@Netpicks1]

You have to test out any idea you may have in trading. You certainly would want some type of trigger. Best thing.....take the parameters you are interested in, decide on how you will enter/exit a trade, work on position sizing.....draw up a trading plan

[@ronmichael7282]

RSI2 will fail on ranging market or in low volatility market. just watch out the volatility. any way great and honest video well done.

[@wiratmakaagungvanship367]

👍

[@countrygent4]

I have been using RSI 3 and Stockastic Fast 3.

[@Netpicks1]

In general, you should be able to change inputs within reason and still get close to the same results. This makes the system more robust.

[@yuchin4763]

Does it work on lower timeframe? Like 15M, 5M, 1M

[@Netpicks1]

The lower time frames that you mention is where most use this setting of the RSI

[@Emotekofficial]

I still feel 200MA would be beneficial for short periods I only Buy if position is above it.

[@Netpicks1]

The thing about feel is that the data may not agree with your feelings. Whatever you do in trading should be tested out over data from different market regimes.

[@Emotekofficial]

@@Netpicks1 I agree with you I myself am a data driven personality. Sorry if I used word feel just to make it layman. What I meant is Statistically at the Normal Distribution of your trial i.e. when you have data of trials as per central limit theorem atleast considering it as a population data you would see that the prices above 200 MA would win the chances. I have back tested in many stocks for past 10 years for the same.

[@Netpicks1]

...now you are speaking my language. :) Appreciate the comment.

[@MK-oj8ol]

I would not call what you covered Larry Connor's 2 period RSI strategy. What you describe is something totally different. Larry Connor's strategy is not a trend strategy. It is a mean reversion strategy where you won't likely be in the trade more than 4-6 bars and is best on higher time frames. You don't even mention TP upon a close above the 5 period MA.

[@Netpicks1]

That's good you would not call it "Larry Connor's 2 period RSI strategy", because I didn't either. *I said the 2 period setting came from him.* Nothing magical about 2 period. Can use a 3. You can take an indicator or setting from any strategy and make it your own. You don't have to parrot the exact strategy.

[@karalinefurby2505]

☃️💵👍