• Free Book
  • Store
    • Books
    • Free First Chapters
    • Free Newsletters
  • Recent Articles

TradingMarkets.com

Quantified Stock Market Trading Strategies & Systems

  • Home
  • New Trading Research
  • Education
    • Articles
      • Connors Research
      • ETFs
      • Options
      • Stocks
      • Volatility
    • Trading Lessons
    • Connors Research
    • Glossary
    • Interview Archive
    • Videos
  • Python
  • Quantamentals
    • Quantamentals: The Next Great Forefront of Trading and Investing
    • Quantamentals Resources
  • Courses
  • Store
    • New Book! The Alpha Formula
    • “Buy The Fear, Sell The Greed” – Best Seller!
    • Swing Trading College 2019
    • Trading Books and Guidebooks
    • Street Smarts
    • Online Trading Courses
    • Private Mentoring with Larry Connors
    • Customized Trading Research
    • Amibroker Strategy Add On Modules
You are here: Home / Connors Research / How to Trade Pullbacks – Part 2: The ConnorsRSI Indicator

How to Trade Pullbacks – Part 2: The ConnorsRSI Indicator

November 26, 2012 by Matt Radtke

Matt Radtke is Senior Researcher for Connors Research. Mr. Radtke graduated magna cum laude from Michigan State University with a degree in computer science. He has 25 years of software development experience in companies large and small, including Hewlett-Packard and Bell Northern Research.

Mr. Radtke has been actively trading stocks, ETFs, and options since 2008. Over the past several years he has become increasingly involved with the Connors Group family of companies, first as a student, then as a member of Chairman’s Club, and finally as a consultant, researcher, and author.

Larry Connors and Connors Research have been developing, testing, and publishing quantified trading strategies since the mid-1990s. During that time, we have had the opportunity to evaluate a great number of different technical indicators and to assess their effectiveness in predicting future price action. Now we’ve taken the next step and created an indicator of our own: ConnorsRSI. Our research has shown ConnorsRSI to be superior to any other momentum indicator that we’ve tested.

Click here to gain instant access to our latest free strategy guidebook: An Introduction to ConnorsRSI. Inside you’ll find a fully-quantified pullback strategy based around the ConnorsRSI indicator.

ConnorsRSI is a composite indicator consisting of three components. Two of the three components utilize the Relative Strength Index (RSI) calculations developed by Welles Wilder in the 1970’s, and the third component ranks the most recent price change on a scale of 0 to 100. Taken together, these three factors form a momentum oscillator, i.e. an indicator that fluctuates between 0 and 100 to indicate the level to which a security is overbought (high values) or oversold (low values). A complete description of the calculations behind the ConnorsRSI indicator can be found here.

For stocks, a good rule of thumb is that the stock is becoming oversold when its ConnorsRSI value falls below 15. A stock with a ConnorsRSI value of less than 10 is very oversold, and a value of less than 5 indicates an extremely oversold condition. Generally, the stocks with the lowest ConnorsRSI values, i.e. the deepest pullbacks, are the ones that will experience the greatest rebounds when their prices revert to the mean.

To see how ConnorsRSI values compare to and complement other common indicators, visit the Trading Markets Screener. Real-time values for ConnorsRSI can be found on the Symbol Details Page of the Trading Markets Analytics site.

In Part 3, we’ll quantify a complete set of entry rules for a Pullback strategy based on ConnorsRSI.

Click here to read How to Trade Pullbacks – Part 1

Click here to read How to Trade Pullbacks – Part 3

Click here to read How to Trade Pullbacks – Part 4

Click here to read How to Trade Pullbacks – Part 5

Filed Under: Connors Research, Education, Recent Tagged With: ConnorsRSI, Pullbacks, Stocks, Swing Trading, Trading Lessons, Trading Pullbacks

About Matt Radtke

Matt Radtke is Senior Researcher for Connors Research. Mr. Radtke graduated magna cum laude from Michigan State University with a degree in computer science. He has 25 years of software development experience in companies large and small, including Hewlett-Packard and Bell Northern Research. Mr. Radtke has been actively trading stocks, ETFs, and options since 2008. Over the past several years he has become increasingly involved with the Connors Group family of companies, first as a student, then as a member of Chairman’s Club, and finally as a consultant, researcher, and author.
Matt has co-authored several quantified strategy guidebooks including ETF Trading with Bollinger Bands, Options Trading with ConnorsRSI, Trading Leveraged ETFs with ConnorsRSI, and ETF Scale-In Trading.

Buy The Fear, Sell The Greed

Buy The Fear, Sell The Greed

Swing Trading College

New Book From Larry Connors and Chris Cain, CMT – "The Alpha Formula; High Powered Strategies to Beat The Market With Less Risk"

We’re excited to announce the release of a new investment book written by Larry Connors and Chris Cain, CMT. The book, “The Alpha Formula; High Powered Strategies to Beat The Market With Less Risk “ combines… Hedge fund legend Ray Dalio’s brilliant insight into combining uncorrelated strategies… With new, minimally correlated, quantified, systematic strategies to trade… [Read More]

Buy The Alpha Formula Now

Connors Research Traders Journal (Volume 57): 7 Real-World Reasons Why Short Strategies Should Be Included In Your Portfolio

In our new book, The Alpha Formula – High Powered Strategies to Beat the Market with Less Risk, we show the benefits of including short-strategies in your portfolio. As a reminder, building portfolios should be based on First Principles – otherwise known as truths. These truths are: Markets Go Up Market Go Down Markets Go… [Read More]

Company Info

The Connors Group, Inc.
185 Hudson St., Suite 2500
Jersey City, NJ 07311
www.cg3.com

About Us

About
Careers
Contact Us
Link To Us

Company Resources

Help
Privacy Policy
Return Policy
Terms & Conditions

Properties

TradingMarkets
Connors Research

Connect with TradingMarkets

Contact

info@cg3.com
973-494-7311 ext. 628

Free Book

Short Term Trading Strategies That Work

© Copyright 2020 The Connors Group, Inc.

Copyright © 2023 · News Pro Theme on Genesis Framework · WordPress · Log in