Backtest an RSI mean-reversion filter on AAPL
RSI mean-reversion is the canonical 'buy oversold, sell overbought' setup. Buy AAPL when its 14-day RSI dips below 30, sell when it climbs above 70. It's a short-holding-period strategy that historically gives up upside in trends but smooths returns in choppy years. Run it free — see exactly how RSI signals fired on AAPL over the last five years.
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How the strategy works
The Relative Strength Index (RSI) measures the ratio of up-day price changes to down-day price changes over a window — 14 days is the default. Readings below 30 are conventionally 'oversold'; above 70 'overbought'. The strategy enters AAPL on a close below RSI 30 and exits on a close above RSI 70. Average holding period: ~2-4 weeks.
AAPL is a tractable name for this filter because (a) it has enough daily volume that 14-day RSI is meaningful (not noise), (b) it experiences regular 5-10% pullbacks even in strong years, giving the strategy enough setups to be statistically meaningful, and (c) earnings-driven gaps are infrequent enough that they don't dominate the result.
How to run this on Livermore
- 1
Open the template
Click 'Run free' below to open this template in the Livermore workspace.
- 2
Choose a ticker
Default universe: AAPL. Swap to any S&P 500 ticker for free.
- 3
Click Run
The backtest runs on real Alpha Vantage price data and shows results in seconds.
Reading the results
Compare total return to buy-and-hold and check the number of trades. If the strategy generated 15+ round trips with a win rate above 55%, it's doing its job. If win rate is above 80% with only 3-4 trades, you're looking at small-sample luck — re-run with a different window or a different ticker to see how durable it is.
FAQ
What is RSI mean reversion?
A strategy that buys an asset when its Relative Strength Index drops below an oversold threshold (typically 30) and sells when it rises above an overbought threshold (typically 70).
Why does mean reversion work some years and not others?
Mean reversion works in choppy, range-bound markets and fails in trending markets — when the market trends, 'oversold' just gets more oversold. A diagnostic: if buy-and-hold has a Sharpe above 1.5, mean reversion will probably underperform that year.
Can I customize the RSI thresholds?
Sign up free and open the strategy in the workspace — you can edit the entry/exit thresholds and re-run. The free Scout tier includes 5 custom backtests per week.
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