Connors RSI Trade

Entry Logic

• Exact Entry Trigger: Connors RSI is a composite of RSI, Up/Down Streak Length, and Rate-of-Change. Enter long when Connors RSI is deeply oversold (e.g., below 10). Enter short when it is deeply overbought (e.g., above 90).
• Confirmation: Wait for price to close higher than its previous close for a long.
• Timeframe: Daily.
• Market Condition: Mean reversion.

Exit Logic

• Profit Targets: Exit when Connors RSI crosses back above 50 for longs, or below 50 for shorts.

Stop Loss Structure

• Hard Stop: A time-based stop of 5 days if the target is not hit.

Risk Management Framework

• Risk Per Trade: 1% of account capital.

Position Sizing Model

• Sizing Approach: Fixed fractional.

Trade Filtering

• Market Conditions to Avoid: Strong trending markets.

Context Framework

• Trend Direction: Only take long signals if the stock is above its 200-day moving average.

Trade Management Rules

• Take Profits: This is a short-term mean reversion strategy.

Time Rules

• Session Notes: A swing trading system with a short holding period.

Setup Classification

• A+ Setup: A Connors RSI reading below 5.

Market Selection Criteria

• Instruments: Liquid stocks and ETFs.

Statistical Edge Metrics

• Win Rate: 70-80%.
• Profit Factor: 1.4.
• Expectancy: 0.2R.

Failure Conditions

• Strategy Fails: If used against a strong primary trend (e.g., buying a dip in a stock below its 200-DMA).

Psychological Rules

• Discipline: Act quickly on exits; do not hold onto trades hoping for more profit.

Advanced Components

• Filters: The 200-day moving average filter is critical.

Location

• Strongest: For buying short-term pullbacks in a long-term uptrend.