1 The Story
Back-tested rules over gut feel
Larry Connors built a career insisting that short-term strategies be quantified and tested. With research partner Cesar Alvarez he published rule-based systems with documented historical results.
Through Connors Research, active since the mid-1990s, Connors has developed and published quantified strategies — most tested on U.S. stocks and indices on daily timeframes. In 2008 he popularized using a 2-period RSI (far shorter than Wilder's default 14) to flag short-term overbought and oversold extremes, detailed in Short-Term Trading Strategies That Work. His reported back-test win rates are high but, as with all back-tests, are historical and not a promise of future results.1
2 The Big Idea
The 2-period RSI
Shorten the lookback, sharpen the signal
By dropping RSI's lookback to 2 periods, Connors turned a smooth momentum gauge into a fast mean-reversion trigger for pullbacks within trends.
It's a clear example of adapting an existing indicator (Wilder's RSI) to a specific, testable edge.1
3 The Method & Contribution
What his approach emphasizes
RSI-2
A 2-period RSI hitting low values flags short-term oversold conditions in an uptrend.1
Mean reversion
Buy short-term weakness within a longer uptrend; exit on strength — the opposite of breakout trading.1
Quantified & tested
Every rule is back-tested with explicit entry, exit, and statistics.1
Back-test caveat
High historical win rates do not guarantee future performance; regimes change.1
4 See It On This Site
RSI, explained on this site
Go deeper
Our RSI deep dive covers the standard indicator and short-period variations like Connors' RSI-2 — with an honest look at the evidence.
5 The Work
His key contribution in print
Short-Term Trading Strategies That Work
Larry Connors & Cesar Alvarez · 2008- Lays out the RSI-2 and related mean-reversion rules with back-tested results.
- A widely cited reference for quantified short-term trading.
6 Read More
Go deeper
- CONCEPTRSI — the definitive guide.
- PLAYBOOKThe Connors RSI-2 mean reversion — the full process.
- TRADERJ. Welles Wilder — who created the RSI he adapted.
- READRSI(2) — StockCharts ChartSchool.
§ Sources
- Larry Connors — RSI-2 & quantified short-term strategies — StockCharts ChartSchool; Short-Term Trading Strategies That Work (2008).