Apple RSI Strategy

In strong trends, RSI can stay overbought or oversold for extended periods. RSI 70 in a strong uptrend might just pause, not reverse. Always consider trend context before expecting a reversal.

RSI 14 is standard and recommended for beginners. RSI 7 is more sensitive with more signals but more false ones. Start with 14, adjust based on experience and timeframe.

RSI alone can work but adding one confirmation (a trend filter like the 50 EMA, or volume) significantly improves results. Don't over-complicate, but don't rely solely on RSI.

Daily chart RSI(14) works well for swing trading AAPL. For intraday, use hourly RSI. Match the timeframe to your holding period. Note that frequent intraday trading triggers the Pattern Day Trader $25,000 minimum equity rule.

RSI below 30 shows oversold but price can keep falling. Crossing back above 30 confirms buyers are stepping in and the reversal is starting - a better entry than catching a falling knife.

Divergence is a warning, not an immediate entry. Wait for confirmation: price breaking a pattern, RSI crossing a key level (30/50), or a reversal candle. Never trade divergence without confirmation.

Regular divergence signals reversal (price new high, RSI lower high = bearish). Hidden divergence signals continuation (price higher low, RSI lower low in an uptrend = bullish continuation).

Uptrend: Expect RSI 40-80, buy dips to 50. Downtrend: Expect RSI 20-60, sell rallies to 50. Range: Classic 30/70 works. Identify the condition first, then adapt the strategy.

Yes, use RSI(7) or RSI(14) on 15-min or hourly charts. The same concepts apply but faster. Combine with intraday indicators like VWAP for better results.

Quality over quantity. 2-4 good setups per week is sufficient. Don't force trades when RSI is in the neutral zone (40-60) with no clear signal.

Use a 70/30 in-sample/out-of-sample split. Accept 10-20% performance degradation as normal. Test nearby parameters - results should be similar. Standard 14/30/70 is often near-optimal.

Mean reversion: 55-60% win rate. Trend following (50 cross): 45-50%. Divergence: 50-55%. Profitability comes from positive expectancy, not just win rate.

Allocate 20-30% to RSI strategies. Mix mean reversion, trend, and divergence approaches. Track each separately. Monitor correlation with other strategies to avoid overexposure.

Use options when: you want defined risk, are seeking leverage, are trading divergence (straddles), or are capital-constrained. Use stock when: a longer hold is expected, simpler management is preferred, or options are illiquid.

5% drawdown: Review for rule violations. 8% drawdown: Reduce size 30%. 10% drawdown: Pause, full review. Resume with paper trading, then 50% size. Scale back up gradually.