How to build profitable trading systems! We short term trading strategies that work larry connors and cesar alvarez dedicated to helping you build profitable trading systems with free tools, sample code and other amazing content. Lets see how well the 2-period RSI trading model developed by Larry Connors and Cesar Alvarez held up during 2014. Is The Christmas Season Bullish For U.
News events related to system trading and our own press releases. Top level category for trading strategies. These are article the build a complete or nearly complete trading system. With the year 2015 only being a few days old, it’s time to look at the very popular 2-period RSI trading method by Larry Connors and Cesar Alvarez. We all know there are no magic indicators but there is an indicator that certainly acted like magic over several decades.
The modified 2-period RSI trading model makes new highs in 2014. During 2011 the market experienced a sudden and sustained drop which put the trading model into loss. Recall, the trading model had no stops. Since this drop the model has been slowly recovering. Below is an equity graph depicting the trading model’s equity curve trading the SPX index from 1980. You can easily see the large drop around trade number 135. Here is a closeup view of the last 23 trades, which covers about the last six years.
The trading model as originally proposed by Larry Connors is very simple and consist of long-only trades. Price must be above its 200-day moving average. Exit when price closes above the 5-day moving average. L of each trade is not reinvested.
Slippage are not accounted for. Below is the annual performance of this trading model over the past few years. We can see that years 2013 and in particular 2014 have seen a drastic reduction in the net profit. Is the strong bullish market which we have been experiencing over the past few years a temporary phenomena which is harming this trading model’s performance?