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Sergey Golubev
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Sergey Golubev  

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Press review

Sergey Golubev, 2018.05.11 14:18

3 Trading Tips for RSI (based on the article)


What is RSI (Relative Strength Index)

RSI (Relative Strength Index) is counted among trading's most popular indicators. This is for good reason, because as a member of the oscillator family, RSI can help us determine the trend, time entries, and more. 
The Relative Strength Index (RSI) was developed by J. Welles Wilder to measure the speed and change of price movements. RSI oscillates and is bound between zero and 100. There are many different uses for RSI and by far the most popular is trading overbought and oversold crossovers.

Think beyond the crossovers

When traders first learn about RSI and other oscillators, they tend to gravitate to overbought and oversold values. While these are intuitive points to enter in the market on retracements, this can be counterproductive in strong trending environments. RSI is considered a momentum oscillator, and this means extended trends can keep RSI overbought or oversold for long periods of time.

Watch the center line

All oscillators have a center line and more often than not, they become a forgotten backdrop compared to the indicator itself. RSI is no different, with a center line found in the middle of the range at a reading of 50. 
Technical forex traders use the centerline to show shifts in the trend. If RSI is above 50, momentum is considered up and traders can look for opportunities to buy the market. A drop below 50 would indicate the development of a new bearish market trend. 



Check your parameters

RSI like many other oscillators is defaulted to a 14 period setting. This means the indicator looks back 14 bars on whatever graph you may be viewing, to create its reading. Even though 14 is the defaulted setting that may not make it the best setting for your trading. Normally short-term traders use a smaller period, such as a nine period RSI, to replicate shorter term movements in the market.. Longer-term traders may opt for a higher period, such as a 25 period RSI, for another indicator line.


Sergey Golubev
Moderator
103789
Sergey Golubev  

New indicator was published on CodeBase - 

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Rocket RSI - indicator for MetaTrader 5

Rocket RSI by MT5

Rocket RSI by MT5

As described in the May 2018 edition of Technical Analysis of Stocks & Commodities by John F. Ehlers. This indicators is an enhancement to the traditional RSI for detecting cyclical reverses.

How to use this indicator in practice:

  • If the indicator spikes below -2, this shows a high probability of a bullish reversal and is therefore a buy signal.
  • If the indicator spikes above 2, this shows a high probability of a bearish reversal and is therefore a sell signal.
Sergey Golubev
Moderator
103789
Sergey Golubev  

RSI Candles - indicator for MetaTrader 5

The chart with RSI indicator by MT5

One possible way of normalizing prices into a known bound.

This is a RSI of High, Low, Open and Close displayed as color candles in it's own sub-window. The interesting is that the prices are reflected in a very close manner to a known 0 to 100 range and that opens a lot of new possibilities.

Sergey Golubev
Moderator
103789
Sergey Golubev  

RSI Candles - Smoothed - indicator for MetaTrader 5

The chart with RSI Candles by Metatrader 5

Combination of 4 RSI values (RSI of High, Low, Open and Close) displayed as candles.

This version has additional option to enable prices pre-smoothing prior to be used in calculation, which makes it an RSI-of-MA combination. To avoid prices pre-smoothing, use smoothing period that is less than or equal to 1.

Chris Mukengeshayi
1140
Chris Mukengeshayi  
Sergey Golubev:

RSI Candles - indicator for MetaTrader 5


One possible way of normalizing prices into a known bound.

This is a RSI of High, Low, Open and Close displayed as color candles in it's own sub-window. The interesting is that the prices are reflected in a very close manner to a known 0 to 100 range and that opens a lot of new possibilities.

Sergey Golubev:

RSI Candles - Smoothed - indicator for MetaTrader 5


Combination of 4 RSI values (RSI of High, Low, Open and Close) displayed as candles.

This version has additional option to enable prices pre-smoothing prior to be used in calculation, which makes it an RSI-of-MA combination. To avoid prices pre-smoothing, use smoothing period that is less than or equal to 1.

Wow, this Indicator is amazing, could they please be replicated or are there available in MT4 version.

Much appreciate, thanks.

Sergey Golubev
Moderator
103789
Sergey Golubev  
Chris Mukengeshayi:

Wow, this Indicator is amazing, could they please be replicated or are there available in MT4 version.

Much appreciate, thanks.

I did not find for MT4 ..

Chris Mukengeshayi
1140
Chris Mukengeshayi  
Sergey Golubev:

I did not find for MT4 ..

Alright thank, It will be awesome to have it in MT4 also, although everyone need to migrate and get used to MT5 which has more functionalities. I still like to test any indicators in both MT5 and MT4.

:-) 

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