You know it has topped the charts of one of the most misused mt4 indicators because the noobs simply jump on to use it without testing the diverse parameters, or study how to use it in different situations. I call it the greed to make money fast.
Use it with MACD. Basically, when the price persistently moves up while the rsi indicator maintains the overbought readings, the MACD indicates divergence by turning down. You’ll get to know whether the market will be reaching an overextended level, and will retrace soon.
I’ve been researching a bit and came across smoothed RSI indicator. Is it any good?
Yeah it’s less twitchy than the RSI indicator resulting in few false positives and a well defined trend. I have been trading with turnkey forex by applying the EMA process to rsi to get a smoothed out RSI indicator.
Like you said they are lagging indicators, won’t it be completely futile to test them on a price action that has already taken place in the past?
I won’t say that a single indicator or an indicator used on its own is pointless. I’d rather say that we get better results when we combine 2-3 technical indicators. I have been a fan of RSI, MACD, and Stochastic indicator, since these basically belong to the same category.
@martinldjs, What?? Read your question out aloud to yourself… Then follow this link…
A few different ways to use the RSI… If you don’t start thinking outside of the square…
You are wasting your time… You’ll get nowhere.
1 Like
Just my opinion.
If something is working for you long term then it is right for you.
You’re correct! Used to aid the identification of a continued momentum. Use this with other indicators to increase your odds that the market is going to continue in said direction and thus can be speculated on
That is the path of least resistance for learning to trade, so hence why it’s so popular.
It’s the lazy way for new and struggling traders to learn.
Literally zero chance of becoming consistently profitable with pure price action.
That’s why every pure price action guru always posts luxury socials and deflects from what matters that the strategy or system they sell is proven.
It’s also why most YouTube vids that offer a strategy are pure price action offered up by unproven teenagers
It’s largely an amateur approach to trading
Hi, of course RSi is useless if you view the RSI as a trend indicator. A RSI is an oscilator this means it moves steady (or it oscilates) from A to B, in this case from overbought to oversold. RSI should only work in range markets and since markets are in a range by 80% of time I wouldn’t go that far and claim RSI is useless. Of course like any indicator the RSI is lagging, altough its a leading indicator but as you said it will stay for a very long time at 70 or 30 in a trendy market.
my tip for you, as mentioned above, use RSI only when markets are in a range (for exemple when ADX is lower 25) of course trading without any indicator at all is the “pro” way since price action is the best and only indicator you will ever need. When trading you shouldn’t predict price movement, you should react.
1 Like
Thank you for this. I am going to back test it now.
1 Like
Any oscillator can help profitability when used properly, with some experience. RSI can be useful for catching reversals and joining trends. As straight overbought/oversold(70/30) it’s not great. I use trend lines and patterns(H&S or double top) drawn on the indicator. Also divergences can be useful. I draw a trend line on the indicator when it is oversold or overbought when that trend line is broken, combined with divergence it can be a good entry for a reversal. If the RSI is bumping along overbought for a long time, draw a horizontal line below the bumps, when it reverses and breaks/closes below the horizontal line it can be a good shorting entry(visa/versa for oversold). For trends, jumping in when RSI crosses/closes above/below the 50, can be effective joining trends. I use a 14 period for all my RSI work but maybe a different period would work better for different trading styles? I tend to combine indicators(RSI/trend line/sma/fibonacci/ATR) and other analysis(candle stick/fundamental/price action…) to build as strong a case as possible to take a position. I use longer time frames to develop my bias then use shorter time frames for entries. Always use proper risk management/position sizing for every trade. I’ve traded futures/stocks/forex/bonds for over 20 yrs now using these techniques. Always been refining/learning.
1 Like