MACD + RSI Strategy for finding uptrends

[madtitan]

Hi everyone,
I am using the below strategy using MACD and RSI for buying scrips in the short term. But how we can identify the false signals generated.
Enter Strategy:

• When RSI(25) crosses over 30 (And)
• When MACD(7,13,9) is greater than MACD-Signal(7,13,9)

Exit Strategy

• When RSI(25) crosses below 70 (Or)
• When +DI(25) crosses below -DI(25) (And) ADX(25) greater than 25

To eliminate the false signals, I tried to use

• ADX indicator to determine the strength. But this was not helpful. ADX was low both in true positive and false positive cases.
• Aroon indicator to determine the strength. This also didn’t help.

Can you help me on this?

 

[newtrader101]

This is a reversal trade right? How can you trade them without confirmation. Clearly, it hasn't started moving up.

 

[madtitan]

@newtrader101 Thanks for replying back For trade beginning, I am using the RSI crossover. But how could we confirm the trade?

I tried using Aroon indicator and ADX with +DI and -DI. In both the indicators, when RSI crosses over there was no strong indication. I ran backtest with the above strategy along with ADX or Aroon for the past years(2019,2018). The backtest results had very few trade signals and the risk-reward ratio was also not good.

How to confirm the reversal when RSI crosses over? Whether we could use any other indicator for trade reversals?

 

[hupsey]

i guess you didn't back test your strategy. eliminating false signals may not be good idea, i also faced this false signal problem, but when i performed back testing, i found that my strategy gives false signal 5 out of 10 trades(giving you a rough idea) but in rest of 5 trades it gives sufficient profit(after tax and brok). so i would suggest you to perform a minimum 200 trades back testing( i did it manually).

 

[madtitan]

Yes, my backtesting window was small. I will increase it and test them.