Winning the RSI Strategy in 2022
Disclaimer: Note, The contents of this website are for personal research purposes only. They are not intended to be investment advice or a recommendation to buy or sell any security. You should consult with a financial professional before making any investment decisions.
Winning the RSI strategy is the RSI strategy that can make a significant change to your day trading.
Are you a swing trader, a day trader, or a trend trader? Winning the RSI strategy in 2022 is an article for you to learn and become one of the big boys in forex trading.
What is RSI? Is RSI a good strategy?
These and so many other questions will be answered right here.
Sit back, relax and get mastery knowledge about trading the financial market.
Contents
RSI as a Trend Indicator
What is RSI? RSI means Relative Strength Indicator. It is an indicator used in determining when an asset is overbought or oversold and traders can seize that knowledge to open orders and make money.
The background knowledge of the RSI trading strategy is, when an asset is overbought, a trader should sell the asset.
Similarly, when an asset is oversold, an RSI trader should buy.
RSI is a trend indicator and is only best used in a trending market. Do we only have trending markets? Of course not!
The financial market could be consolidating or ranging and if a trader keeps obeying the RSI strategy sheepishly, then such a trader loses money.
A trending move is either an upward price movement or a downward price movement but never a top-bottom movement.
In forex trading, we have both high and low time frames.
What happens in the higher time frame controls the lower time frame. You can’t be trading RSI strategy on a 5M time frame for a long hour trading.
How to Stay Winning the RSI Strategy
What is the best RSI trading strategy?
Many traders are also trading the RSI strategy as much as you are.
When a large percentage of traders are trading with the same strategy, the winning ratio decreases. How do you win with the RSI trading strategy? You need to know the best settings for your RSI setup.
What is the best RSI setting for swing trading? What is the best RSI setting for day trading? A swing trader should not use the same setup as a day trader and expect the best result.
Is RSI a good strategy? Yes! But you have to perfect your trading skills with the use of RSI and some other trading strategies. RSI is not a Holy grail strategy for just anyone to win in the financial market.
RSI Strategy for Swing Trading
How do you trade with RSI? Swing traders look to benefit from market swings either, high or low only once or twice a week. Swing traders are medium-term focused on changes of trends in the financial market.
Swing traders benefit so much from the RSI strategy using the overbought and oversold principles.
How to use RSI in swing trading?
What are the best RSI settings for swing trading?
First, I would explain the settings.
The best setting of RSI for swing trading is using the 20-periods and 70-30 levels.
The 70-level is overbought and the 30-level is oversold.
Lastly, these settings must be used with a trendline on the RSI oscillator. You should only look to buy or sell with breakouts on this trendline.
Look to buy only when price breaks out the falling trendline drawn across peaks on the RSI oscillator.
Look to sell only when price breaks out on the rising trendline drawn across troughs on the RSI oscillator.
NOTE: At least 2 peaks or troughs must be considered.
RSI Strategy for Day Trading
Is RSI good for day trading?
The best settings for day trading are the 10-periods and using the same 70-30 levels of the RSI.
The 10-period has enough price data and price changes adaptability.
To use this principle on the lower time frame, for example on the 15M time frame you could employ some strategies that are different from the swing trading strategy.
A day trader is always looking for daily opportunities to buy or sell every day.
You can make use of the support and resistance areas to make better entry and exit while implementing the RSI strategy.
Also, when the RSI indicator shows price is below the 30-level, use a bullish candlestick pattern to take place a buy order.
Conversely, when the RSI indicator shows price is above 70-level, use a bearish candlestick pattern to place a sell order.
What is RSI buy signal?
When the RSI is above 70-level it shows a significant strength of the asset, as a smart trader you don’t jump in and sell saying the market is overbought. These are winning secrets of the 5% of traders that win in the financial market.
Tweaking the RSI Trading Strategy
This is a technique I use personally for my day trading. I have decided to teach you this technique for free. LOL.. yes, just for my page readers only.
You can tweak the RSI strategy in two ways:
1. Using two RSI settings
2. Using the 50-level
Using two RSI Settings for Winning the RSI Strategy in 2022
Combining two RSI settings could increase your winning chances as a smart day trader.
Plot a 5-periods RSI over the 10-periods and look for a cross-over around the 70-level or around the 30-level positions on the RSI oscillators.
When the 5-periods RSI crosses over the 10-periods at the 30-level mark, you should GO LONG.
When the 5-periods RSI crosses over the 10-periods at the 70-level mark, you should GO SHORT.
Using the 50-level for winning the RSI strategy in 2022
Using the 50-level mark of the RSI will enable you to see clearly when the price is ranging and this strategy will save you from trading just overbought or oversold.
Price could range between the 50-level mark and 30-level mark and price could also range between the 50-level mark and the 70-level mark
You should know when to stay out of the market and when to take full advantage of the RSI strategy. This 50-level mark strategy will make you identify the trend or market structure.
Trading the RSI Divergence to Stay Winning the RSI strategy
RSI Divergence is when the RSI indicator moves in a different direction from the direction of the market price.
This is a variation that deviates from the standard.
This technique has been employed to trade the market differently and make a reasonable profit.
There are two kinds of RSI divergence, which are bullish divergence and bearish divergence.
Bullish divergence is observed when market price is falling but the RSI indicator is showing a rise of points. This should happen at the end of a downtrend. It is an indication to GO LONG.
Bearish divergence is seen when the market price is rising but the RSI indicator is showing a fall of points. This should happen at the end of an uptrend. It is an indication to GO SHORT.
Conclusion
You must have learned:
What an RSI indicator is.
How to trade the RSI indicator
How to tweak the RSI indicator and how to trade RSI as a divergence indicator.
Read over this winning the RSI strategy again and again until you must have fully mastered the skill.
Disclaimer: Note, The contents of this website are for personal research purposes only. They are not intended to be investment advice or a recommendation to buy or sell any security. You should consult with a financial professional before making any investment decisions.
