Garbled post. Will update later

Combining RSI with Bollinger Bands

I read a very nice article on Active Trader about using RSI that is sensitive to the market conditions. The usual RSI indicator has a fixed values to indicate the overbought and oversold conditions.

This new trading system uses Bollinger band superimposed on the RSI. It varies the values of the sell/buy signals by varing it according to the volatility. Backtesting of the system uses 1 million dollars for the period 1995 through 2005. The results show 3 years out of 10 in the red. The results are better compared to the performance of using just the RSI by itself. Drawdowns are very minimal. The return is very high. I think it varied from 5% to 30% from year to year, with an impressive profit at the end of 10 years.

The only variable that is bothering me is the trading capital used. Not everyone has the luxury of trading with 1 million dollars with 5% risk per trade. So how would this perform for an account with 30k or 100k with 2% as the risk per trade. Only testing can reveal the performance for this scenario. This was for the stocks.

The same system was backtested for futures and the result was 100% return on 1 million dollars.