Connors RSI2

Connors RSI2 – The High Win Rate Mean Reversion System for Indicies ETFs & Stocks (MT5)

A professional implementation of Larry Connors' RSI(2) strategy, designed to systematically capture high-probability short-term reversals in equity markets.

This strategy exploits one of the most consistent edges in trading: extreme short-term exhaustion followed by rapid mean reversion. When RSI(2) reaches extreme levels, markets are temporarily stretched — creating repeatable bounce opportunities that this EA captures with disciplined, rule-based execution.

Core Edge

Traditional RSI strategies use longer lookback periods (e.g. 14), which are too slow for short-term mean reversion. RSI(2) is different:

• Ultra-sensitive to short-term price movement
• Reaches extreme readings frequently
• Identifies exhaustion points with high precision

An RSI(2) reading below 10 represents a statistically significant oversold condition in an uptrend — a setup that has consistently demonstrated strong mean reversion behaviour across decades of market data.

Research Foundation

Based on Larry Connors' RSI(2) strategy from "Short Term Trading Strategies That Work" (TradingMarkets, 2008). Connors' research showed that the 2-period RSI is one of the most effective short-term mean reversion indicators when combined with a long-term trend filter. This is one of the most widely studied and validated short-term trading systems.

Strategy Rules

Long side:

• Entry: RSI(2) drops below 10 (default) while price is above the SMA trend filter
• Exit: RSI(2) rises above 65 (default)

Short side (disabled by default):

• Entry: RSI(2) rises above 90 (default) while price is below the SMA trend filter
• Exit: RSI(2) drops below 35 (default)

The default settings implement Connors' original RSI-based exit exactly as published. Optional Take-Profit and N-bar timeout exits have been added as enhancements for traders who want additional exit control — both are OFF by default.

Two entry modes are available:

• Standard: single entry per signal
• Aggressive: adds one additional position if conditions remain met

Typical System Behaviour

• High win rate (often 70 to 85 percent depending on market and settings)
• Small, consistent gains per trade
• Occasional drawdowns during strong trending markets
• Performs best on liquid equity indices and ETFs

This is a mean reversion system, not a trend-following strategy. It profits from short-term pullbacks rather than large directional moves.

Who This EA Is For

Ideal for:

• Professional Traders building multi-strategy portfolios
• Users familiar with systematic trading concepts
• Traders targeting consistency over aggressive returns

Not suitable for:

• "Set and forget" users expecting constant profits and no drawdowns
• Traders who cannot tolerate temporary drawdowns
• Users seeking high-risk, high-return systems

Key Features

• Fully automated execution on MetaTrader 5
• Multi-symbol trading: up to 10 markets from a single chart
• Three position sizing modes: Fixed Lots, Dollar Value, and Account Percentage
• Automatic currency conversion for cross-currency instruments
• Standard and Aggressive entry modes
• Optional enhanced exits: Take Profit (%) and N-Bar Timeout
• Built-in performance dashboard with win rate, P&L, average trade, and open positions
• Alerts via chart popups, push notifications, and email

Recommended Markets

Best suited for:

• US equity indices: S&P 500 (US500), NASDAQ 100 (NDX100/US100), Dow Jones (US30)
• Other liquid indices: Russell 2000 (US2000), ASX 200, DAX 40, FTSE 100
• Equity ETFs: SPY, QQQ, DIA, IWM, XLK

Individual stocks can be traded but carry higher risk. Single stocks are inherently more volatile than indices and ETFs, and their downside risk during company-specific events is substantially larger. If trading individual equities, use conservative position sizing and always backtest first.

Not recommended for Forex or commodities unless specifically tested. Do not mix asset classes in the same EA instance.

Screenshots

Screenshots show individual trade examples on SPY with entry and exit markers, RSI(2) indicator values, and strategy details.

Part of a Professional EA Series

This EA is one of 9 mean reversion strategies available from M.Wills. All target the same core edge — short-term pullbacks in trending markets — but each uses a different signal to identify when that pullback has gone far enough. Running multiple uncorrelated entry signals together can reduce drawdowns, improve consistency, and smooth equity curves.

The series includes:

• Connors TPS (scale-in with RSI)
• Connors RSI2 (RSI extreme readings)
• Connors Double 7s (7-day price channel)
• Connors Percent B (Bollinger Band %b)
• Bandy Naive MR (consecutive down days)
• Bandy PIRDPO (detrended price oscillator)
• Bandy RVI2 (relative vigor index)
• Bandy DV2 (close-to-midpoint momentum)
• Bandy Z-Score (statistical z-score)

Expert Advisor Settings

General Settings

Magic Number (default: 12345) - Unique identifier for this EA's trades. Use different numbers when running multiple EAs on the same account to prevent trade conflicts.

Trade Entry Mode (default: Open of Next Bar) - Controls when trades are executed:

• OPEN OF NEXT BAR: Places trades at the next bar open. Best for backtesting.
• CLOSE OF THIS BAR: Executes near the daily session close. Recommended for live trading.
• EXACT TIME: Executes at a user-defined time each day using the broker's server clock.

Exact Time (default: 23:54) - The time in HH:MM format used when Trade Entry Mode is set to Exact Time.

Timeframe (default: Current) - The chart timeframe for analysis. Daily is recommended.

Position Sizing

Sizing Mode (default: Lot Size) - Determines how position size is calculated:

• LOT SIZE: Uses a fixed number of lots per trade entry.
• TRADE VALUE $: Allocates a fixed dollar amount per trade, automatically converted to the correct lot size.
• ACCOUNT BALANCE %: Allocates a percentage of the current account balance per trade.

Position Size (default: 0.01) - The value applied to the selected sizing mode.

Max Margin % of Equity (default: 30.0) - Safety limit that caps how much margin a single trade can consume relative to account equity. Before every trade, the EA calculates the required margin and checks whether it would exceed this percentage of current equity. If it would, the trade is skipped and a message is logged to the Journal. This prevents accidental over-leverage on brokers with high minimum lot sizes. Set to 0 to disable.

Symbol Management

Additional Symbols (default: blank) - Comma-separated list of additional symbols to trade from a single chart (e.g. US500,NDX100,ASX200). Leave blank to trade only the chart symbol.

Max Symbols Open at Once (default: 2) - Maximum number of symbols that can have active trades simultaneously.

Indicator Settings

RSI Period (default: 2) - The lookback period for the RSI calculation. The ultra-short 2-period setting creates an extremely responsive oscillator that captures short-term exhaustion.

Long System

Enable Long (default: true) - Toggles long (buy) trading on or off.

Entry Mode (default: Standard) - Standard = single entry per signal. Aggressive = adds one additional position.

Trend Filter: Price > SMA (default: true) - Long trades are only taken when price is above the moving average, ensuring trades align with the broader uptrend.

Trend Filter: SMA Period (default: 200) - The lookback period for the trend filter.

Entry: RSI Below (default: 10) - When RSI(2) drops below this level, a long entry is triggered.

Exit: RSI Above (default: 65) - When RSI(2) rises above this level, long positions are closed. The exit threshold is deliberately below the traditional 70 overbought level to capture profits earlier.

Exit: Take Profit % (default: 0.0) - Percentage-based profit target. Disabled by default — the RSI exit is Connors' original exit mechanism. Set to a percentage value to add a profit target as an additional exit layer.

Exit: N-Bar Timeout (default: 0) - Maximum bars to hold a position. Disabled by default. Set to a non-zero value to add a time-based exit.

Aggressive: 2nd Entry Multiplier (default: 1.0) - Position size multiplier for the second entry in Aggressive mode.

Short System

Enable Short (default: false) - Toggles short (sell) trading on or off. Disabled by default.

Entry Mode (default: Standard) - Standard = single entry per signal. Aggressive = adds one additional position.

Trend Filter: Price < SMA (default: true) - Short trades are only taken when price is below the moving average, ensuring trades align with the broader downtrend.

Trend Filter: SMA Period (default: 200) - The lookback period for the trend filter.

Entry: RSI Above (default: 90) - When RSI(2) rises above this level, a short entry is triggered.

Exit: RSI Below (default: 35) - When RSI(2) drops below this level, short positions are closed.

Exit: Take Profit % (default: 0.0) - Percentage-based profit target for short positions. Disabled by default.

Exit: N-Bar Timeout (default: 0) - Maximum bars to hold a short position before closing at market. Disabled by default.

Aggressive: 2nd Entry Multiplier (default: 1.0) - Position size multiplier for the second entry in Aggressive mode.

Display Settings

Show Dashboard (default: true) - Displays the on-chart information panel showing all active settings and current trade status.

Font Size (default: 20) - Text size for the dashboard display.

Show Trade Metrics (default: true) - Includes performance statistics in the dashboard: total trades, win/loss ratio, accuracy, average trade, and cumulative P&L.

Metrics Start Date (default: 2000.01.01) - Starting date for performance calculations.

Alerts and Notifications

Chart Alerts (default: false) - Enable on-chart popup alerts when trade signals are generated.

Push Notifications (default: false) - Enable mobile push notifications for trade signals. Requires push notifications to be configured in the MetaTrader 5 terminal.

Email Notifications (default: false) - Enable email notifications for trade signals. Requires email to be configured in the MetaTrader 5 terminal settings.

Backtesting and Execution Notes

This strategy is designed for entry at the close of the trading day, when the signal is first identified. Backtesting research shows that entering at the close provides a measurable edge over waiting for the next day's open.

• Default mode: Open of Next Bar (required for MQL5 Market validation)
• Recommended for live trading: Close of This Bar, or Exact Time (1-2 minutes before market close)
• Set Exact Time to match your broker's daily close (e.g. 23:54 for a server that closes at 23:55)

Backtesting tips:

• Use "1 minute OHLC" or higher tick model for accurate results on daily bars
• Do not use "Open prices only" for daily timeframe strategies
• Close of This Bar and Exact Time modes may not function correctly in the Strategy Tester

Additional notes:

• Do not mix different asset classes in the same EA instance
• For Forex and Metals, use the Lot Size position sizing method only — Trade Value and Account Percentage modes are designed for stocks and indices

Requirements

• MetaTrader 5 platform (Hedging or Netting account)
• Minimum recommended leverage: 1:30
• Daily timeframe preferred
• All symbols must be available in your broker's Market Watch

Support

If you need custom adjustments or have questions, leave a comment with your email and we will get back to you. Always test the EA on a demo account before running it on a live account.

Risk Disclosure

This EA trades mean reversion setups using RSI(2) extreme readings. However, RSI can remain at extreme levels during sustained trends, and exits may not prevent losses during severe drawdowns. Backtests use historical data and do not account for slippage, partial fills, or changing market conditions. Proper position sizing relative to account equity is essential. Always test with demo accounts before trading live. Past performance does not guarantee future results.