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3 Tips for Trading with the RSI Indicator

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Are you having trouble trading with the RSI indicator? Here are three tips that can help in using the RSI indicator.


Relative Strength Index (RSI) is one of the popular oscillator indicators and is considered to be quite reliable. Since it was made by Welles Wilder in 1978, the RSI indicator is used in trading in all types of markets, including by forex traders. However, there are actually certain tricks to using RSI that can affect the accuracy of trading results, but not many people know.

Traditionally, the RSI indicator is used to determine the right time of entry by looking at overbought and oversold levels, and detecting possible changes in direction of the trend by observing divergence towards price movements. In addition to the prevalent function of the RSI, here are three tips from traders who might be able to help in using this indicator.


Trading with the RSI Indicator

 

Tip 1: In the case of a strong trend, ignore overbought and oversold the RSI indicator.
When prices move trending strongly in a relatively long period of time, the entry method relies on overbought and oversold the RSI indicator becomes inaccurate.

This indicator is made by comparing the number of positive (higher) price changes with negative (lower) price changes for a certain period. This ratio is plotted in the range 0 to +100. If after this time period the price movement does not change (such as when trending strongly), then the RSI will remain in overbought condition (when an uptrend condition) or oversold (when a downtrend condition).

Consider the example case on the following GBP / USD chart:


3 Trading Tips with Indicators

 

In the example of GBP / USD above, the downtrend movement is strong and the RSI remains in the oversold area for a considerable period of time. In this case, if you buy when oversold, it will cause a loss.

The solution, before observing the RSI indicator, traders must see the trend indicator first. Trend strength indicators that are often used are MACD, Bollinger Bands and ADX.



Tip 2: Pay attention to level 50 on the RSI (center line) indicator.
All oscillator type indicators have a middle level or center line, usually at level 50, or 50%. Likewise on the RSI indicator. This often overlooked center line shows the momentum of changing direction of price movements when a retracement occurs, or even when there is a change in direction of the trend.

What is the function of the center line on the RSI indicator?

When the RSI breaks the center line towards the top, it signals a buy signal. And vice versa, when it breaks the center line towards the bottom, it signals a sell signal. Examples are as follows:


3 Trading Tips with Indicators

 

In the example chart GBP / USD above, it appears that the center line functions as a support level. When the RSI indicator breaks for the second time, the price switches to a downtrend.



Tip 3: Use of the RSI indicator parameter needs to be adjusted to the time frame trading.
Usually, the default time period parameters on the trading platform for almost all oscillator type indicators are 14, including RSI. Based on experience, period 14 is suitable for Daily time frames, but less accurate for lower time frame trading.

RSI indicator maker Welles Wilder also recommended using period 14 on the Daily time frame. According to Wilder, the smaller the time period of measurement, the more sensitive it will be, making it difficult to observe; whereas if the time period is getting bigger, it will be less sensitive, thus affecting the accuracy of measurements.

So, if you are going to use the RSI indicator at the time frame lower or higher than Daily, it should not be based on the default parameter. If so, how is the adjustment?

Basically, the smaller the period setting, the more trading signals will be generated. Daily Traders with a 1 hour down time frame usually use period 9 RSI, while Scalper uses period 7. While medium and long term traders use periods 14 or 25.


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#1 - February 04, 2019, 06:59:45 AM

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the analysis technique using the RSI indicator is very useful I can apply it to my trading everyday
#2 - February 04, 2019, 09:27:43 AM

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3 Tips for Trading with the RSI Indicator in Forex Education_xx
Are you having trouble trading with the RSI indicator? Here are three tips that can help in using the RSI indicator.


Relative Strength Index (RSI) is one of the popular oscillator indicators and is considered to be quite reliable. Since it was made by Welles Wilder in 1978, the RSI indicator is used in trading in all types of markets, including by forex traders. However, there are actually certain tricks to using RSI that can affect the accuracy of trading results, but not many people know.
to use this indicator it seems that I need to learn a lot more, at least new knowledge has emerged thanks a lot sir
#3 - February 04, 2019, 10:16:53 AM
« Last Edit: February 04, 2019, 12:08:49 PM by Admin »

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RSI is one of the favorite indicators and I often use it because as an oscillator indicator, RSI is quite accurate compared to other oscillator indicators such as stocastic, for example.

The strategy you provide seems to be improving and needs to be tried in the system that I have because my understanding of the RSI indicator is quite good.
#4 - February 04, 2019, 05:03:22 PM

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RSI is one of the favorite indicators and I often use it because as an oscillator indicator, RSI is quite accurate compared to other oscillator indicators such as stocastic, for example.

The strategy you provide seems to be improving and needs to be tried in the system that I have because my understanding of the RSI indicator is quite good.
try sharing, bro, the RSI trading system, and what help indicators do you use, for additional analysis of the RSI?
#5 - February 04, 2019, 05:50:52 PM

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try sharing, bro, the RSI trading system, and what help indicators do you use, for additional analysis of the RSI?
For additional indicators and as a confirmation, I use the bowerband indicator. If the RSI indicator shows a saturation point and the price is outside the BB indicator, I will enter there with an exit point or take profit in the midline or midleband BB.
#6 - February 05, 2019, 12:09:22 AM

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when I use RSI, I will only use it when I trade with divergent convergent patterns and it really helps me in observing a regular market
#7 - February 05, 2019, 02:27:26 AM

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very useful trading tips and tricks using the RSI indicator, because before that I have never used this indicator but I try to understand it, this is very well understood and also very easy to understand by me a beginner trader
#8 - February 05, 2019, 12:14:38 PM

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Strategy Rsi indicator 

RSI means Refractive Strength Index. 
RSI gives news that will market uptrend or downtrend?
Strategy:
RSI>50= Market will be uptrend 
RSI<50= Market will be downtrend
#9 - February 09, 2019, 03:22:41 PM

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3 Tips for Trading with the RSI Indicator in Forex Education_xx
Are you having trouble trading with the RSI indicator? Here are three tips that can help in using the RSI indicator.


Relative Strength Index (RSI) is one of the popular oscillator indicators and is considered to be quite reliable. Since it was made by Welles Wilder in 1978, the RSI indicator is used in trading in all types of markets, including by forex traders. However, there are actually certain tricks to using RSI that can affect the accuracy of trading results, but not many people know.

Traditionally, the RSI indicator is used to determine the right time of entry by looking at overbought and oversold levels, and detecting possible changes in direction of the trend by observing divergence towards price movements. In addition to the prevalent function of the RSI, here are three tips from traders who might be able to help in using this indicator.


Trading with the RSI Indicator

 

Tip 1: In the case of a strong trend, ignore overbought and oversold the RSI indicator.
When prices move trending strongly in a relatively long period of time, the entry method relies on overbought and oversold the RSI indicator becomes inaccurate.

This indicator is made by comparing the number of positive (higher) price changes with negative (lower) price changes for a certain period. This ratio is plotted in the range 0 to +100. If after this time period the price movement does not change (such as when trending strongly), then the RSI will remain in overbought condition (when an uptrend condition) or oversold (when a downtrend condition).

Consider the example case on the following GBP / USD chart:


3 Trading Tips with Indicators

 

In the example of GBP / USD above, the downtrend movement is strong and the RSI remains in the oversold area for a considerable period of time. In this case, if you buy when oversold, it will cause a loss.

The solution, before observing the RSI indicator, traders must see the trend indicator first. Trend strength indicators that are often used are MACD, Bollinger Bands and ADX.



Tip 2: Pay attention to level 50 on the RSI (center line) indicator.
All oscillator type indicators have a middle level or center line, usually at level 50, or 50%. Likewise on the RSI indicator. This often overlooked center line shows the momentum of changing direction of price movements when a retracement occurs, or even when there is a change in direction of the trend.

What is the function of the center line on the RSI indicator?

When the RSI breaks the center line towards the top, it signals a buy signal. And vice versa, when it breaks the center line towards the bottom, it signals a sell signal. Examples are as follows:


3 Trading Tips with Indicators

 

In the example chart GBP / USD above, it appears that the center line functions as a support level. When the RSI indicator breaks for the second time, the price switches to a downtrend.



Tip 3: Use of the RSI indicator parameter needs to be adjusted to the time frame trading.
Usually, the default time period parameters on the trading platform for almost all oscillator type indicators are 14, including RSI. Based on experience, period 14 is suitable for Daily time frames, but less accurate for lower time frame trading.

RSI indicator maker Welles Wilder also recommended using period 14 on the Daily time frame. According to Wilder, the smaller the time period of measurement, the more sensitive it will be, making it difficult to observe; whereas if the time period is getting bigger, it will be less sensitive, thus affecting the accuracy of measurements.

So, if you are going to use the RSI indicator at the time frame lower or higher than Daily, it should not be based on the default parameter. If so, how is the adjustment?

Basically, the smaller the period setting, the more trading signals will be generated. Daily Traders with a 1 hour down time frame usually use period 9 RSI, while Scalper uses period 7. While medium and long term traders use periods 14 or 25.
how to read rsi techniques? is the technique accurate? i like to read the rsi wrong? are there any tips? once again thank you for sharing
#10 - February 09, 2019, 05:35:38 PM

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In general, the RSI is used to seek confirmation of buy and sell signals, as well as other indicators. sell confirmation is sought when the RSI has entered the overbought area, instead a buy signal is sought when the RSI has entered the oversold area.

Sell signal confirmation is when the RSI drops from the overbought area and is below 70, while the buy confirmation is when the RSI rises from the oversold area and is above 30.
#11 - February 10, 2019, 03:35:10 AM

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3 Tips for Trading with the RSI Indicator in Forex Education_xx
RSI is one of the favorite indicators and I often use it because as an oscillator indicator, RSI is quite accurate compared to other oscillator indicators such as stocastic, for example.

The strategy you provide seems to be improving and needs to be tried in the system that I have because my understanding of the RSI indicator is quite good.
thank you, I often combine rsi and the custom added line 50 is the difference between up and sell and d conformation after the BB
#12 - February 10, 2019, 05:07:27 AM

  • 3 Tips for Trading with the RSI Indicator in Forex Education_index
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try sharing, bro, the RSI trading system, and what help indicators do you use, for additional analysis of the RSI?
I add the custom rsi line 50 d rsi 14 and I add the BB, the 50 d rsi line is the separator between the rise and fall of the price and it's always right, the need is only patient
#13 - February 10, 2019, 05:09:17 AM

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how to read rsi techniques? is the technique accurate? i like to read the rsi wrong? are there any tips? once again thank you for sharing
but this is like my friend above

I add the custom rsi line 50 d rsi 14 and I add the BB, the 50 d rsi line is the separator between the rise and fall of the price and it's always right, the need is only patient
#14 - February 10, 2019, 05:10:33 AM

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rsi is one of the most commonly used indicators of traders around the world besides stoch and macd as indicators to determine overbought and oversold, but if wrong use it will be very dangerous, using the correct rsi indicator is to see the current trend whether up or down, and we will open positions following the direction of the trend by waiting for correction in the overbought and oversold areas
#15 - July 20, 2021, 07:44:41 PM

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