Bollinger Bands and RSI Essay Example | Topics and Well Written Essays - 1250 words

Bollinger Bands and RSI - Essay employmentAs the report stresses the purpose of an RSI is to compare the magnitude of recent gains to recent losses in an enterprise to determine overbought and oversold conditions of an asset. The RSI is best use as a valuable complement to other indices, for in and of itself it is capable to the fact that large surges and drops in the price of an asset will affect the RSI by creating false get or sell signals. Different RSI settings can allow traders to get more accurate market readings slightly different strategies that they might wish to use. Swing traders might want to set the measured period at 15 days, while those buying to hold for longer times might want to make it bear upon to 30 or even 50 days. In this analysis the author has made the Bollinger Bands our trade trigger off and the RSI our trading confirmation. The two indices must be simultaneously within their respective domains where we desire them for a given over buy or sell posi tion, or we ignore the trade signal and hold everything. He has used this strategy so that the noise created by volatility indicated by the Bollinger Bands gets reduced by the high winnow out filter of the RSI reading. Simply put, he is looking at once at an individual stocks performance and at that stocks industrys performance. The author has taken an aggressive come near in our analysis. This was a result simply of following the strategy that we had laid out we were not attempting to be overly aggressive nor overly conservative and we were not tossed to and fro by emotions.