How the RSI Oversold/Overbought Works
The rsi oversold/overbought is one of the most widely-used signals in trading. It’s simple, mechanical, and removes emotional decision-making from your trading by generating clear entry and exit signals based on the RSI indicator.
On TSLA, the RSI acts as a trend filter. It won’t catch every exact bottom, but it reliably captures the meat of major moves while keeping you out of chop.
5-Year Performance on TSLA
Over five years (2021-08-30 → 2026-08-28), the RSI Oversold/Overbought delivered a -46.1% total return on TSLA, compounding at -11.6% annually.
At -0.13, the RSI earned less than one units of return for every unit of risk taken. For context, anything above 1.0 is considered good; above 1.5 is excellent.
The catch? A 70.0% max drawdown. At some point during this 5-year run, you’d have been down nearly 70% from peak equity. That’s stomach-churning territory for most traders. If you can’t handle that kind of drawdown, this isn’t for you — or you need to size down.
Risk Assessment
| Metric | Value | Verdict |
|---|---|---|
| Sharpe Ratio | -0.13 | ❌ Weak |
| Max Drawdown | 70.0% | ⚠️ Significant |
| Win Rate | 20.0% | ❌ Low — relies on outsized wins |
| Profit Factor | 0.37 | ❌ Unprofitable |
| Trades/Year | ~15 total | Selective — not overtrading |
The profit factor of 0.37 tells the real story: when the RSI fires, the winning signals don’t outweigh the losers. Combined with a 20.0% win rate, this requires careful position sizing to be profitable.
Does the RSI Oversold/Overbought Work on TSLA?
The rsi oversold/overbought struggled to generate meaningful edge on TSLA over this 5-year period. With a -0.13 Sharpe ratio and 0.37 profit factor, the risk-adjusted returns are below what most systematic traders would consider acceptable.
This doesn’t mean the RSI is useless — it may work better on different assets, timeframes, or when combined with other filters. But on TSLA with default parameters over 5 years, it didn’t produce a compelling standalone edge.
Our take: skip it on TSLA unless you’re combining it with other confirmations or using it on different timeframes.
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Data source: Yahoo Finance (yfinance). Backtest engine: backtrader. 95% position sizing. 0.1% commission per trade. Last refreshed: August 29, 2026. Not financial advice. Past performance does not guarantee future results.
Year-by-Year Breakdown
| Year | Return | Trades | Win Rate |
|---|---|---|---|
| 2021 | +44.6% | 0 | 20.0% |
| 2022 | -69.2% | 5 | 20.0% |
| 2023 | +129.9% | 4 | 20.0% |
| 2024 | +62.6% | 2 | 20.0% |
| 2025 | +18.6% | 3 | 20.0% |
| 2026 | -20.8% | 1 | 20.0% |
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