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22.How to Trade the Relative Strength Index (RSI) Like a Pro

www.informedtrades.com — Home of the largest free university for traders For personalized mentoring in trading, check out the InformedTrades 8 Step mentoring program bit.ly A lesson on how to trade the RSI for traders and investors using technical analysis in the stock market, futures market and forex market. In our last lesson we looked at 3 different ways that the MACD indicator can be traded. In today’s lesson we are going to look at a class of indicators which are known as Oscillators with a look at how to trade one of the more popular Oscillators the Relative Strength Index (RSI). An oscillator is a leading technical indicator which fluctuates above and below a center line and normally has upper and lower bands which indicate overbought and oversold conditions in the market (an exception to this would be the MACD which is an Oscillator as well). One of the most popular Oscillators outside of the MACD which we have already gone over is the Relative Strength Index (RSI) which is where we will start our discussion. The RSI is best described as an indicator which represents the momentum in a particular financial instrument as well as when it is reaching extreme levels to the upside (referred to as overbought) or downside (referred to as oversold) and is therefore due for a reversal. The indicator accomplishes this through a formula which compares the size of recent gains for a particular financial instrument to the size of recent losses, the results of which are plotted
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25 Responses

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  2. Jay Towie

    Another great video Dave!

    I must admit I have found the RSI to be very useful as a confirmation with my strategies entry points. I use it with bullpips (search “bullpips” on google) and it? has increased my strike rate to about 75%!

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  6. paidtosignups1

    In general the most reliable period is the 1 day chart. Finding the reversal is a matter of trend trading.? You should trade trend by checking multiple time frames, ex. 1 day and 1 hour; if the trend is moving in the same direction, you should trade the trend, if the shorter timeframe is moving in the opposite direction than the long time frame, you are about to see a trend reversal.
    The best way in my opinion is to trade the RSI crossover on the 1 day chart.

  7. Maserati555

    Dave, is it true that? you could have overbought signal for say, a 5 day trading period but for the last 6 months have an oversold indication?

  8. youracharacter

    good? stuff bro. i am just now learning these techniques and find it quite intriguing.

  9. sharkshockey19

    would it make sense to only use the rsi as a confirmation to another indicator, like today I was watching apple and there was a crossover with the 50 day and 200 day moving average which looked like a good time to short and so it did fall, and the rsi at the time was around 60. Then as it was falling it eventually hit 25? on the rsi with a drop of a $1.50, so this could be a good time to cover your trade and it did start to go back up after it hit this 25 point on the rsi.

  10. ayshortier

    These vids are great. They are simple and you can stop and repeat? them.

  11. pembepanter06

    very nice explanations? thank you for videos

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  15. Parizeau21

    You really have a large collection of brown shirts Dave!

    I’ve just finished reading Technical Analysis of the Financial Markets and your videos are? a great follow up!

  16. maharajmmj

    1. Can i use this oscillator for intraday trading?
    2. If i use, which is the best time period to trade? in intraday 14,30, 40?

  17. maharajmmj

    Can i use 14 periods? of this RSI for intra-day?

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  22. maxinc26

    I’m looking for a momentum based video maybe you can? come up with one?
    thanks

  23. maxinc26

    very interesting?

  24. mwtichen

    Here’s a way to use RSI. Set it to 2 periods instead of 14. Overbought readings > 95, oversold? readings < 5. Works on the spider etf. It's been backtested and it works.

  25. Serrokot

    In the market it is necessary to buy only. It is the keystone to success. Because if the action? price grow, at shareholders on accounts there is money for purchase of actions. It proceeds infinitely.