MACD and RSI together - How to profit from them

14th of September 2016 -

As I touched on the RSI and MACD in my earlier posts, I thought it may be useful for me to give you a few examples of  how to make use of them in order to Buy and Sell a Stock.
Before going to the examples please read the following GUIDELINES and RULES:

GUIDELINES -
*** MACD works only if there is a TREND, if the Stock is moving sideways (Consolidation) this will not    be useful.

*** RSI may be useful when a Stock is consolidating, and can help the MACD during a TREND.

*** There are no HOLY GRAIL 100% ACCURATE INDICATORS in the entire world, as such YOU NEED TO KNOW WHERE TO STOP YOUR LOSS. This is a must.

RULES -
*** You Buy when the RSI CROSSES OVER 50 and POINTING UP + MACD LINE CROSSES ABOVE THE SIGNAL LINE.

*** You Sell when the RSI  moves over 70 points and start pointing down OR the MACD line crosses below the Signal line, which ever happens first.

**** You Stop by selling at the previous support level.

*** YOU MUST NEVER EVER BREAK THESE RULES. ***

Now let's take a look at CFVF.N.0000 Daily Chart

As you can see the there had been 3 complete trades in CFVF from March 2016 to date. In the 1st trade it was the MACD that crossed over on the 10th March, then on  the 16th the RSI crossed over 50 points, at which point it was bought at 17.20. Then the RSI edged over 70 points and retraced down on the 15th of April, thus it was sold on that date at 25.40, giving an 8.20 profit. In this trade the stop was at the previous support of 13.80. The next trade was when the MACD crossed over on the 13th June, thereafter the RSI crossed over 50 points on the 8th of July, at which the Buy was made at 20.00. The RSI edged a little over 70 and retraced on the 27th July, triggering a sell at 24.40, giving a return of 4.40, whilst the stop was at 18.50. The 3rd and final trade was executed when the RSI crossed over 50 points on the 31st of August, MACD cross over following thereafter on the same day making the Buy at 22.00 with a stop at 21.50. the Sell was made at 32.30 on the 8th of Sept as the RSI retraced after crossing over 80 points. The return was 10.30.

2 important things to note here is that historically the RSI has moved over 80 points in CFVF, therefore when you Buy to sell in the rally there is a big chance of getting a decent return. The next thing is that when you Buy with the RSI crossing over 50 points, you are avoiding the risk of buying at sideway movements, and Buy within a trend on many occasions.