Level 6: Advanced StrategiesInteractive
The RSI-25 Strategy for ETFs (Larry Connors)
22 min readUpdated Mar 2026
Disclaimer
This educational content is for informational purposes only and does not constitute financial advice. Past performance is not indicative of future results. Trading involves risk of loss. You should consult a qualified financial advisor before making investment decisions. Swingfolio is a trade journaling tool, not a financial advisory service.
The RSI-25 adapts mean-reversion for Exchange-Traded Funds in long-term uptrends experiencing short-term corrections. Developed by Larry Connors, it exploits the fact that ETFs, as diversified baskets of stocks, revert to the mean more reliably than individual stocks.
Scaling Risk
Adding to a losing position is dangerous in most contexts. Here it works because the trend filter (200-day SMA) confirms the long-term trend is intact. Never add to a losing position in an ETF that is below its 200-day SMA.
Similar to RSI-2, Connors' backtesting shows fixed stops reduce profitability. Apply your L4 position sizing rules: risk 0.5-1% per position, and use a disaster stop at 8-10% below entry for catastrophic protection.
Broad Market (Best) — SPY (S&P 500), QQQ (Nasdaq 100), DIA (Dow Jones), IWM (Russell 2000)
Sector (Good) — XLK (Technology), XLF (Financials), XLE (Energy), XLV (Healthcare), XLI (Industrials)
International (Acceptable) — EFA (Developed International), EEM (Emerging Markets)
Both strategies can run simultaneously since they target different instruments. An RSI-2 trade on AAPL and an RSI-25 trade on QQQ are complementary, not overlapping.
Strategy developed by Larry Connors. Presented in High Probability ETF Trading (2009). All strategy details presented for educational purposes.
Key Takeaways
Try This
Add a 4-period RSI to a chart of SPY. Identify the last 3 times RSI dropped below 25 while price was above the 200-day SMA. Track when RSI crossed back above 55. What was the average holding time and price change?
Swingfolio supports ETF tracking with automatic position sizing for RSI-25 entries.
Start Tracking FreeDisclaimer
This educational content is for informational purposes only and does not constitute financial advice. Past performance is not indicative of future results. Trading involves risk of loss. You should consult a qualified financial advisor before making investment decisions. Swingfolio is a trade journaling tool, not a financial advisory service.