Indicator strategies

 

There are many so-called indicators that may help decide how to enter trades. Some typical examples of such indicators are MACD or RSI. These strategies are very straightforward to code and easy to backtest.

Nevertheless, the main issue is that they do not necessarily lead to significant income. For instance there is no guarantee that a stock whose RSI has fallen below some low values will really increase in value immediately. A trader who wishes to wait until RSI reaches again a high value may experience a significant and unpleasant drawdown. Finally the waiting time can be long so that the trader cannot use his/her financial resources for other trades.

Nevertheless, it is still possible to use such strategies and this is what we did in our research. We developed two strategies that we call “Indicator strategy” and “Indicator strategy+”. The results of backtesting are presented here. These strategies do not introduce any new indicators but a simple filtering of potentially not successful entries.

 

 

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