You should know about the
RSI indicator tips if you really love to use this strategy. But, before that, make sure to understand further about it’s definition first and more.
Relative Strength Index (RSI) is known quite reliable and also becomes a famous oscillator indicator to use. It is used in trading in all types of markets, including by forex traders.
However, there are actually certain tricks in using this method that can affect the accuracy of The results. Here is the further explanation for you to note.
The Best RSI indicator Tips
Traditionally, the RSI indicator is used to determine the exact entry time by looking at overbought and oversold levels. It as well as detecting possible trend directions by observing divergence towards price movements. In addition to the usual function of it, here are three tips from traders that might be helpful in using this indicator.
1. In a strong trend state, ignore the overbought and oversold
When the price is trending strongly on a relatively long timeframe, the entry method by relying on the overbought and oversold becomes inaccurate again. These RSI indicator tips must be remembered.
This method is created by comparing the number of positive (higher) price changes with negative (lower) price changes for a certain period. The ratio is plotted in the range from 0 to +100.
If after that period of time the price movement does not change (such as when trending strongly), then the RSI will remain on the overbought when the condition is uptrend.
Or when it was oversold where the condition is downtrend. The solution, before observing, traders should look at the trend first. Frequently used trend strength are MACD, Bollinger Bands and ADX.
2. Pay attention to level 50 on the RSI (center line) indicator.
It is also one of the important RSI indicator tips. All oscillator types usually have a middle level or center line. Commonly, it is at level 50, or 50%. Likewise on this Relative Strength Index.
This often overlooked center line shows the momentum of changing the direction of the price movement. It is usually when a retracement occurs, or even when there is a change in the direction of the trend.
What is actually the function of that center line? When it breaks through the center line in the upward direction, then it hints at a buy signal. And vice versa, when breaking through the center line in the downward direction, it hints at a sell signal.
3. Parameter needs to be adjusted to the trading timeframe.
This one of the RSI indicator tips are sometimes forgotyen. Usually, the default time period parameter on the trading platform for almost all indicators of the oscillator type is 14.
Based on experience, a period of 14 is suitable for the Daily timeframe, but less accurate for lower trading timeframes. A professional also advocated using a period of 14 on the Daily timeframe. The smaller the measurement time period, the more sensitive it will be, making observation difficult.
Support It with the Right Broker
The tips above can be applied better if you use the
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