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

[youracharacter]

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

[ayshortier]

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

[pembepanter06]

very nice explanations thank you for videos

[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!

[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?

[maharajmmj]

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

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[maxinc26]

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

thanks

[maxinc26]

very interesting

[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.

[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.

[81borgy]

Great set of videos by the way i've learned so much thankyou : )

What should we take into account when choosing RSI and other indicator time frames. Is it mainly about the time frame of the chart we are analysing?

[AntiPsychopath]

You guys have done a brilliant job in general!!!

[FreeFOREXautoROBOT]

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[gsr4371]

Hi Dave,

i tried using RSI's default period at 14 but i don't get the same peaks and valleys like you do. I have a smooth sailing line that goes up and down the 30 and 70 level and i don't see any divergence. Hence, i would like to know what are the periods that you are using or would you recommend?

[gretscher]

What I noticed is on the E-Mini Dow (YM) 30 works great for oversold but for overbought 80 is a better level to indicate overbought. Okay about 75 but often it rides over 70 from 70 to 80, but mostly about 75. It will shoot over 70 and still the prices will be rising so it's about 75 where you hit over bought then it might go a few up to about 77 then retrace back down. What do you guys think?

[gretscher]

If the chart is long and even if it is near or at 70 I'll still go in long if the MACD indicates go in long and the opposite for a short (using the 30). After all it does go below 30 or above 70 so I use my chart reading abilities with the MACD and Fibonacci. Since nothing is written in stone you have to use these diff indicators and integrate them to work the best.

[gretscher]

If I understand what he is saying you don't wait until it crosses above or below the 50 level to tell if the trend is bullish or bearish but you sell when it goes below 70 after being above 70. Then buy when it goes above 30 if below 30 already. Nothing is written in stone. Sometimes it stays above 70 and continues and the same goes with 30 for a short. And different chart time values give different RSI readings. You need to experiment with this and different time values to get it right.

[gretscher]

I use the center line crossover with in the RSI but I also use the MACD. I've been using the MACD for a few years and just started with the RSI. Using the RSI in conjunction with the MACD really does the well. He sounds like maybe the center line cross over is not reliable except under certain circumstances but it sure works for me with the MACD. I don't though go long or short when it hits the 30 or 70. I wait to see what the MACD is doing and sometimes wait for a crossover.

[sunkpk]

Hi Dave,

your lession simple and understandable.

Thanks.

[cunnidvd]

Great lessons Dave. Thanks!

[weronika111]

Hi David,

What exactly are these gains and losses that the RSI is based on? How can one possibly know all gains and losses of all the millions of market participants?

Warm regards from Germany,

Weronika

[HLCMINVESTORS]

Hi Weronika,

There's a procedure call "Back Testing".

it calculates to entries & exits for the underlying security.

[OilTrading]

Greetings my friend, just wanted to let you know not to trade the forex market, watch my forex video and you'll see it's a scam.

I'm trading Oil now, if you haven't tried it you may want to, it's the best thing I personally have ever found, I'm able to trade it everyday and make money, and do so in a very precise way.

Sincerely,

David

[Paavoi99]

Started trading the emini S&P and I like it a lot

better than trading stocks or anything else.

[iffty2]

In which time frame rsi works the best. Daily or hourly.

[HLCMINVESTORS]

They work the same, but you must know how to use RSI correctly.

Buying when RSI crosses 30 and sell when RSI crosses 70 is not the best methods. You must know the range rule for both bullish and bearish markets.

[pdean12345]

Although this video explains the RSI as most typically do, it is incorrect. If you look at the first chart RSI moved up and down from overbought to oversold and price continued on the bullish trend. There is better information on RSI.

[mattie9481]

where?

[kenji4861]

Where can I view the RSI?  Google Finance Yahoo Finance?

[LiptonGuy]

Thanks for another great video

[penpusher8342]

David,

I am using the MACD (13,26,9) and am considering using RSI for confirmation is it important to use the same time periods for the RSI as I am using for MACD?

[InformedTrades]

I would suggest using them on the same time periods, although you can use these indicators on any time period, they are generally more reliable on a longer time frame.

[penpusher8342]

Thank you

[HLCMINVESTORS]

Hi David,

Yes, you can. However it depends on your service provider.

[crossleyjuan]

Hi Dave, I noticed that the RSI changed if I use a different time frame, which should I take to figure out if the trend is reversing? I tried to see the support and resistance lines but it did not work, I did some tests and lose in every attempt, the first time I saw a trend changing from down to up and got confirmation with the RSI, but just after I did the buy trade, the trend reversed again and kept going down.

[InformedTrades]

That's really just a matter of opinion. You can adjust any setting to give you a stronger or weaker indication. For some common RSI settings, I would suggest stopping by InformedTrades and posting this topic in one of the forums so you can talk with some experienced traders who utilize RSI :)

[hibeango]

Thanks for the tutorial Dave!

I read that large surges and drops in the RSI during volatile times can cause false buy/sell signals. Is this true? If so, I think it would be important to inform new traders of this. Thanks again!

[InformedTrades]

Hey Hibeango, This is true. For a good example of this take a look at RSI or Stochastics during the recent market crash and you will see we were on "extremely oversold" for quite some time and are now on "extremely overbought".

-Brendan

[sharkshockey19]

@InformedTrades 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.

[noputtbob]

Hi Dave You've been a great mentor. My question is that I noticed the RSI and MACD both show oversold/overbought cond. Do I really need both?

Thanks Stock Jock

Bob

[cherylish1]

on a one minute & five minute chart- what parameters should I use? would a default be useful for 15 min chart too? Im using FXCM & I dont know if I should change parameters as I switch chart times

[vignesh123]

i love this thank for sharing with us thanks keep on help beginners like us

[WarningGP]

no complaints, good easy explanation. i bought charting software at a crazy high price n dunno how to use it, hopfully i can learn from u. its so exciting to go and plot what i saw n learnt... eva heard of a ROM: relative oscilator movement?

[InformedTrades]

thanks for the comment I am glad you like the video. Can't say that I have heard of the ROM. Best Regards, Dave

[andyb1979z]

Excellent video, thanks!

[zotopec]

Dave thank you very much for this exceptional education ... but I would like a separate lesson on where to set our RSI indicators ..... I mean in MT4 they are set from 0 - 100 by default ... and input is on 14, I would like to know where to set them and why ?

[InformedTrades]

My pleasure thank you for the comment and for watching. The large majority of traders I know use the standard input for the RSI indicator which is 14. This is simply the number of periods the indicator looks back at so if you want to make it more sensitive to recent price action you can reduce that number or less sensitive you can increase it. Best Regards, Dave

[visulube]

Dear Dave

You are the "Daddy" of trading.

Thankyou so much.

[InformedTrades]

thanks for the comment I am glad you liked it and thanks for watching. Best Regards, Dave

[youngtaylor1]

fantastic video

[InformedTrades]

glad you liked it thank you for watching and for the compliment. Best Regards, Dave

[jak672]

I am a relatively novice trader, and your videos have been of great help. I'm glad to see you're receiving appropriate levels of gratitude!

[InformedTrades]

Hi Jak672, Thanks for the comment and for watching I am glad you like the videos. Best Regards, Dave

[learntoprofit0co0uk]

Quality video - Your website's free trading course is pure gold. I encourage everyone to check out David's wonderful website as well!

[InformedTrades]

Thanks again for the testimonial! Best Regards, Dave

[onetouchbeauty]

The only thing I can say is awesome. I know you must hear this all the time but GREAT PRESENTATIONS!!!

[InformedTrades]

Hi onetouchbeauty, thanks a lot for the comment I don't think one can every get enough compliments;-). Best Regards, Dave

[yourpalcliffy]

Hello David,

First of all I would like to congratulate on the great videos you have put up.

I have aquestion about configuring the RSI. what are the parameters that should be set. Like for MACD it is 26/16/9.

As per the software I am using it uses 14,1 as default. Could you please briefly explain the importance and usage of same?

[InformedTrades]

Thanks for the comment and for watching I am glad you like the videos. 14 is the default number of periods for the RSI which means that the indicator uses the last 14 periods for whatever timeframe chart you are looking at to calculate the momentum in the market. I use the default setting for most indicators including this one however if you want to change it to make it more sensitive to more recent data then lower the number and vice versa. Best Regards, Dave

[dewal7007]

Hi David

I am in Namibia, And you are a Great help!!

[InformedTrades]

Hi Dewal7007, Glad to hear from you I am glad you like the videos and thank you for watching. Best Regards, Dave

[mrjaywilliams]

Great video!

was just wondering is the RSI a lagging indicator? I heard this somewhere

[InformedTrades]

Hi Mrjaywilliams,  No the RSI is a leading indicator because it tries to gauge the momentum of the market to give traders an indication of future price action. Best Regards, Dave

[toguNYC]

GREAT video for beginners! :D

[InformedTrades]

Hi toguNYC, Thanks for the comment and for watching I am glad you like them. Best Regards, Dave

[magicbroker]

Hi Dave,

great job. Thx.

Regards, magic

[InformedTrades]

Hi Magic, Thanks for the comment and for watching I'm glad you like the videos. Best Regards, Dave

[Especially4Naasira]

(because conventional name RSI is misleading..)

[Especially4Naasira]

Something that may help you: I read somewhere that RSI was a relative strength of it's own market.

So now, I use the RSI pseudo acromyn as:

Relative Strength of Itself (may help your readers)

[InformedTrades]

yes the RSI is the relative strength of an instrument compared to the past strength of the instrument which is why it is a momentum indicator. There is also a relative strength indicator which compares two different instruments so you are right they are often confused. In general and always with my videos if you see relative strength index they are talking about the indicator we are discussing here. Best Regards, Dave

[Especially4Naasira]

Hello, I have been studying the ROC momentum indicator.

1) Since RSI is a momentum indicator, is it also a LEADING indicator (the ROC is)

2) All the indicators seem to be similar in use, what is advantage of using RSI over STOCASTICS or MACD? They all seem to do the same thing, i.e. they warn of change in trend.

3) Does the RSI divergence count if its not from extreme values? (Also does the stochastics divergence count if not from extreme values?)

Thank-you very much David:)

[InformedTrades]

Hi Especially4Naasira, Thanks for the comment.

1. Yes RSI is designed in a way that I think most would call it a leading technical indicator.

2. As far as the RSI and the Stochastic go they are derived in a way to show similar things so its really a matter of preference there amoung the specific traders. As the MACD uses moving averages however you have additional insight over and above momentum.

2. Most would say yes and yes but more so when extreme.

Best Regards, Dave

[Especially4Naasira]

Thanks David, I made some hand written notes on your comments.

Thanks

[atlanticl]

The middle line crossover in my opinion is the most effective, provided you use stop losses. Even looking in your charts, I can analyze that though sometimes "hiccups" do occur, but in that case the sensitivity of the indicator helps the user abort a trade and prevent further losses.

[regikeyz]

Hi David, I'm confused as to the difference in definition between an OSCILLATOR and an INDICATOR

1) Are all oscillators also Indicators?

e.g. MACD I thought was an indicator

2) What is definition of oscillator and what is def of indicator?

Any help would be much appreciated!

[InformedTrades]

Hi Regikeyz, No problem. An oscillator is simply an indicator that fluctuates around a center point like the MACD, the Stochastic, and the RSI. So yes all oscillators when referring to trading are also indicators.

An indicator is simply a mathematical formula applied to pieces of data on a chart which tries to tell you something about the market such as whether it is trending or in a range. Hope that helps and Best Regards, Dave

[regikeyz]

Hey excellent, thank-you very much by your very quick response! That does clear things up for me significantly..

Only question remaining is im just trying to think of an indicator that is NOT an oscillator..

Every indicator I can think of is also an

oscillator..

Sentiment indicator is not an oscillator right? Also Bollinger bands are indicators but not oscillators? But they do kind of oscillate dont they..?!

[regikeyz]

Could you give some examples of indicators that are not oscillators? Just so I can visualise the difference?

Is plotting volume bars an indicator? I don't think so as it works directly on the immediate data (i.e. not derived from it).. where as OBV would be an indicator.. is this correct mate?! Many many thanks!

[InformedTrades]

Hi Regikeyz,

Some examples of indicators that are not oscillators are bollinger bands and moving averages.

You are correct that volume is not an indicator as indicators are based off of volume and price. I wouldn't get too caught up in the semantics here though just remember that all these things can tell you things about the market and understanding what they tell you is really what matters. Best Regards, Dave

[regikeyz]

Great thanks Dave! I dislike ambiguity and like things to be clear. Your help was much appreciated!

[devilroshan]

hai i am devilroshan from Brunei after watching ur video i mnage double my 100USD mini account become 500USD...thanks for your RSI how about any technique can you share me another technique?

[InformedTrades]

Hi Devilroshan, Thank you for your comment I am glad that your trading is going well. If you visit my channel by clicking on "InformedTrades" in the upper right hand corner you will be taken to a page with over 70 similar videos. There are also thousands of videos and articles on my website InformedTrades dot com Best Regards, Dave

[HGalland]

Hello David,

Just made it to Lesson 22 and again outstanding. I appreciate the quality of this work and the professionalism on making this concepts and examples available to everyone.

Thanks again.

[InformedTrades]

Hi HGalland, Thanks for the comment am glad you are enjoying the videos. Best Regards, Dave

[cableforex]

Great entry level explanation of the RSI. Look forwad to an explanation that pitches to an advanced level.

[InformedTrades]

hi cableforex, thanks a lot for the feedback. Once I am done with the basics I will let you know. Best Regards, Dave

[Schweizer135]

Very good. At some point please do an "advanced" version where more suttle uses of the RSI are demonstrated, such as an RSI trendline break. Well done and appreciated.

[InformedTrades]

thanks a lot for the feedback. Will add that to the list and let you know when it is up. Best Regards, David

[jeffguroo]

...and to think of what other are charging for this same info. Thanks David, much appreciated.

[InformedTrades]

Thanks a lot for the feedback I am glad you liked it. Best Regards, David