RSI Explanation
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Thread: RSI Explanation

  1. #1
    Hi Guys!

    I'm new to FX and also have a lot of queries as you can imagine.

    I have a question regarding RSI actually. I know a lot of traders are referring to it. What's it used for? In the kind of egy is it relevant? Has it anything to do with momentum?

    Any explanation would be appreciated.


  2. #2
    There is many RSI informative article you can have through google. If you looking for RSI trading platform you can find it here on forexintuitive.



  3. #3
    Quote Originally Posted by ;
    that I would also recommend checking out investopedia to get a more comprehensive explanation.
    I second this, I use a lot, especially when I was first starting out. There is a lot of articles that are trustworthy there, and finest is no delay period

  4. #4
    Investopedia is a really good resource for advice. You can also go through the tutorial of .


  5. #5
    RSI is the relative strength index

    it smooths the calculations for RS of an asset.

    First find the gain or loss from taking current near - previous close

    you need to take a period of N profits and get the average first of the profits
    then do the same with the losses. After you've got Typical of profits for X interval and average of losses for X period, you'll need to split

    there's where the smoothing comes in, he uses the same smoothing formula because his ATR. Where he chooses (the average of 13 previous current)/ 14 for the RS

    to get the calculation for the RSI = 100-(100/1 RS) this can provide you the constant smoothing effect.

    Currently readings over 70 imply that the markets profits have been out performing the average losses for an extended time period (this can imply that mean reversion will happen but it may also indie a strong upward tendency)

    reading under 30 indie a market that's been falling for an extended time period.

    RSI alone can not be profitable because here is the problem =
    a contrarian position on a market that's been moving upwards via RSI is basically the same as seeing an outlier from normal volatility in an attempt to capture the mean reversion, or pull back.

    The problem lies when actually is not an outlier however a powerful directional movement.

  6. #6

  7. #7
    Bollinger Bands and RSI are common technical indiors that are used by numerous men and women. From amateurs to professional traders! I want to share with you about the best way to use RSI and Bollinger ring today. Watch on Youtube and have a look through the e-books.
    Bollinger Bands


    E-book: Simply download it. Has only few pages, but it provides detail about those indiors. Hope it might help

  8. #8
    Yeah, most of us use RSI sooner or later, some of us more frequently than others to gauge if a currency is overbought or oversold..and that's about it.

  9. #9
    Quote Originally Posted by ;
    Yeah, most of us use RSI at some point, a number of us more frequently than other people to gauge if a currency is overbought or oversold..and that is about it.
    Agree. It works well under market conditions. Like all tools, one ought to know its strengths and limitations.

  10. #10
    I've a bit of a love-hate thing with RSI - overbought and oversold readings can be seriously wrong in a trending market. But have been getting some good results using RSI lately with a new egy. Even then though - I still have to watch out for tendencies.

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