Not on the Nasdaq. Buying when the 5-minute RSI dropped below 30 and selling when it rose above 70 lost −$7.25 per trade after costs (±$4.00), in 7 of 8 years. Before costs the signals already went slightly the wrong way: price tended to keep going (−2.5 points in 30 minutes). Doing the opposite didn't make a proven edge either.
We measured 3,449 signals in 1,813 Micro Nasdaq sessions (2019-2026), New York session, 5-minute bars, the classic 14-period RSI. Entry at the next bar's open, exit 30 or 60 minutes later. Commission $1.20 and 1 tick of slippage in and out.
Every signal, measured
| Signal | Exit | Signals | Wins | Points in its favor | After costs |
|---|---|---|---|---|---|
| Oversold (RSI under 30): buy | 30 min | 1,623 | 50% | −2.8 ± 2.9 | −$7.88 ± $5.81 |
| Oversold (RSI under 30): buy | 60 min | 1,623 | 48% | −3.5 ± 4.5 | −$9.30 ± $8.92 |
| Overbought (RSI over 70): sell | 30 min | 1,826 | 44% | −2.2 ± 2.7 | −$6.69 ± $5.49 |
| Overbought (RSI over 70): sell | 60 min | 1,826 | 46% | −2.0 ± 3.7 | −$6.11 ± $7.32 |
| Both | 30 min | 3,449 | 47% | −2.5 ± 2.0 | −$7.25 ± $4.00 |
| Both | 60 min | 3,449 | 47% | −2.7 ± 2.9 | −$7.61 ± $5.76 |
± is the 95% margin of error, grouped by day. Points in the signal's direction from entry to exit.
What it means
- "Overbought" isn't "about to fall". An RSI over 70 means price went up a lot recently, and on the Nasdaq it tended to keep going a bit.
- Hit rate close to half, then costs. With a coin flip and $2.20 of costs per round trip, every variant ends up negative.
- Doing the opposite isn't the answer: following the move averaged +$2.85 per trade (±$4.00). Zero is inside the margin.
What it's good for
- As a description of how stretched the move is, not as an entry. Combine context with an entry you've tested yourself.
- Before trusting any indicator, check it against a control: 15 trading myths tested with data.
- And with enough trades: how many do you need?
Educational content based on our own experience. Not investment advice. Firm rules change: check them on each firm's website. This article contains no affiliate links.