Obscure overextended indicators


New member
Hi everyone, I am seeking tips, help, or collaboration with my mean reversion setup. So my mean reversion setup has been extremely successful thus far. The study uses several indictors to find the highest or lowest point of overextension in a timeframe (I use 30m with this one). The setup has an EXTREMELY high win rate and almost none of my trades have gone negative using it. The reason it's so successful is because when it generates a signal, there is an extremely high likelihood that it is at or near a high for the current time frame and that a reversion is likely. I have found that almost 100% of the time, my play will net money, however, the profit is often a very small move. You could make more money with this by letting it run but I find that to be more risky. Therefore, I only trade this setup in the forex markets because the leverage allows me to capitalize off of these small moves. I have been using this for a while now and it has been consistently successful. I only lose money when I get greedy and let plays run (though sometimes I make a ton from this as well). Here is a screen shot of the setup and then an explanation below:

Explanation: The fat middle line is a linear regression trendline. The sets of lines immediately above and below it are adding one standard deviation (there's 2 lines because I use a slightly different calculation for each) and then the sets of lines on the outside are 2 SD. The lines also automatically change color (green or red) depending on if the LR trendline is sloping up or down. The bands are polynomial regression bands, which I like more than bollinger bands because they produce far fewer false hits. The reversal bubbles are actually from a study from this site. I changed them a bit to make them produce fewer false signals but they're essentially the same. The lines and bands change to yellow when the price crosses them. The first subgraph is an RSI indicator. The important one is the white one, which is just a slow RSI with 90 and 10 as overextended values. The other lines are slower RSI and an average of the RSI, they are less important. The bottom subgraph is the Kairi relative index. This is a rarely used indicator originating in Japan. I was inspired by Takashi Kotegawa, the legendary trader, who uses it. This measures the distance between the price and the 25 MA. The yellow line is 90% of the highest or lowest distance away from the MA, so that is considered overextended.

How I use it: Using this setup is pretty simple. There are 2 necessary components and then the rest of the components simply help to get a better entry. The first necessary component is that price must cross at least 1 of the outermost lines (the darker red lines on the top and bottom). The price rarely crosses over the outermost lines (because 95% of all data is within 2 SD), but it very often gets close. The next necessary component is that RSI must be overbought or oversold depending on the direction you want to trade. For example, if the stock crossed the bottom outermost line, RSI would need to be oversold. The rest of the indicators are simply used to get better entries. The Kairi indicator produces signals far less often than RSI, however, if the other conditions are met AND Kairi is overextended, then you definitely have a great setup. Finally, the bands produce by far the fewest signals and rarely produce signals near the outermost lines, so if you do have a setup where everything hits including the bands, then that's an excellent trade. I use the reversal bubble indicator as confirmation that I took the correct trade but again this is not necessary. Like I said before, I use this on the 30m timeframe and only use it on forex because it's very good at predicting tops or bottoms. However, though it is good at predicting tops or bottoms, it cannot predict when a full reversion to the mean will happen. This is why I like to capitalize on very small moves, which is profitable because of the leverage with forex. I haven't tried this fully with equities but don't think it would be as successful.

My request: I want to improve this indicator. It's already extremely successful but I want to make it even better. Here are my questions:
1. Generally, what indicators would add to improve this? Seriously, I'm open to anything
2. If you are familiar with statistics, what are some other statistical studies/models I could do to improve this. Again, I am open to anything
3. What are some overbought/oversold or mean reversion indicators that you find useful? I have searched the internet for more indicators but keep finding RSI, stochastic, and things like that, so I'm kind of looking for some obscure indicators here.
4. Literally, anything else that you could think of that might make this setup better would be greatly appreciated.

I am willing to share y setup with anyone who gives me some useful information! Feel free to comment or DM me! Thanks everyone! @BenTen @J007RMC @horserider @MerryDay just wanted to tag all of you in this to see what you think because I've learned so much from all of you about thinkscript!
I trade a proprietary mean reversion system with RSI as one of 3-5 factors, except that I use 2 period RSI (and nothing in my setup overlaps with yours). If you share your chart, I would love to take a look. I trade intraday 2 min. charts ES/RTY (futures) mostly for this system. Perhaps we can help each other; I'm happy to discuss strategy.
Last edited by a moderator:
Kairi and RSI are both momentum indicators. If the settings are manipulated, they will provide the same signals.
This is call multicollinearity. Using multicollinear indicators usually does not have value except when used in the manner that you describe.

Yours is an illustration of a positive use of multicollinear studies. Having them setup with different lengths assists in weeding out false signals.

I'm kind of looking for some obscure indicators here.
The use of standard indicators tends to be a self-fulfilling prophecy. As long as the majority believes in them, those signals will move markets. You don't have that advantage w/ obscure studies.

Lastly, more indicators are not better. You have the linear regression w/ deviation providing supply&demand. You have your RSI for momentum. You have your reversion bands for trend. The last thing regular equity trading includes is volume. Which does not apply to Forex.

I personally also include market and cycle and analyze consolidation/expansion periods to provide me insight into market structure:
Indicators only indicate, not predict - 99% of indicators are based on price or volume, so understanding the market structure is critical. Look for areas of price consolidation to capture the moves of price expansion.
I am a swing trader and I don't trade Forex so I do not know if the above applies.

You didn't mention time frames.
Multi-timeframe analysis is an important thing for all traders. Before you open a trade, open charts in several timelines. This will help you avoid making mistakes and identify some points of interests.

Your strategy looks sound. I hope you will share your setup w/ the community. Keep in mind:
Any trading strategy, no matter how simple or complicated, will have losses. There is no way to avoid them. That's why its critical to use stops, regardless of your indicators or method. Research and understand position sizing, probabilities, and risk-to-reward - these are highly important to successful trading.
Last edited:
I trade a proprietary mean reversion system with RSI as one of 3-5 factors, except that I use 2 period RSI (and nothing in my setup overlaps with yours). If you share your chart, I would love to take a look. I trade intraday 2 min. charts ES/RTY (futures) mostly for this system. Perhaps we can help each other; I'm happy to discuss strategy.
Is this one of your own design, or did you purchase it somewhere? If so, would you recommend it?
Just for reference:
Meaningful discussion as @squatsandstonks has initiated on the subject of proprietary indicators and how/whether they enhance our trading is encouraged.
Responses should keep in mind:

* Advertising is prohibited.
* Requests or offers of pirated scripts can result in being banned from the forum.
* Keep the discussion cordial. Demeaning comments of price, the people that sell the indicators is not appropriate.

Last edited:
Is this one of your own design, or did you purchase it somewhere? If so, would you recommend it?
I created my own system/strategy based on commonly available indicators, nothing paid. I spent a ton of time backtesting and forward testing it, tweaking it, etc. I got the idea from Larry Connor's 2 period RSI strategy and developed it further to make it my own.
what FX pairs do you most commonly trade? if you can give me those, i'll see how my own mean-rev strategy looks on them compared to that one screen shot of yours.
Hi everyone, I'm seeking some overextended indicators beyond the typical RSI type. I'm looking for any information whatsoever about more obscure or less-used indicators that attempt to predict overbought/oversold conditions. Literally anything you can name will help here. I'm also looking for indicators or strategies to assist with RSI type indicators - for example, do you know of any indicators that can help predict when an already overbought/sold RSI is at its peak overextendedness? I understand that many indicators work as self-fulfilling prophecies because many people use them, but I am not looking for that , I am looking for less-used indicators (or even indicators that aren't "rare" but maybe that I may have overlooked). Again, literally anything you can name will help. Thank you!

Join useThinkScript to post your question to a community of 21,000+ developers and traders.

Similar threads

Not the exact question you're looking for?

Start a new thread and receive assistance from our community.

87k+ Posts
325 Online
Create Post

Similar threads

Similar threads

The Market Trading Game Changer

Join 2,500+ subscribers inside the useThinkScript VIP Membership Club
  • Exclusive indicators
  • Proven strategies & setups
  • Private Discord community
  • ‘Buy The Dip’ signal alerts
  • Exclusive members-only content
  • Add-ons and resources
  • 1 full year of unlimited support

Frequently Asked Questions

What is useThinkScript?

useThinkScript is the #1 community of stock market investors using indicators and other tools to power their trading strategies. Traders of all skill levels use our forums to learn about scripting and indicators, help each other, and discover new ways to gain an edge in the markets.

How do I get started?

We get it. Our forum can be intimidating, if not overwhelming. With thousands of topics, tens of thousands of posts, our community has created an incredibly deep knowledge base for stock traders. No one can ever exhaust every resource provided on our site.

If you are new, or just looking for guidance, here are some helpful links to get you started.

What are the benefits of VIP Membership?
VIP members get exclusive access to these proven and tested premium indicators: Buy the Dip, Advanced Market Moves 2.0, Take Profit, and Volatility Trading Range. In addition, VIP members get access to over 50 VIP-only custom indicators, add-ons, and strategies, private VIP-only forums, private Discord channel to discuss trades and strategies in real-time, customer support, trade alerts, and much more. Learn all about VIP membership here.
How can I access the premium indicators?
To access the premium indicators, which are plug and play ready, sign up for VIP membership here.