The RSI, relative strength indicator is one of the few trading indicators used in Forex trading that can actually act as a standalone trading system. A standalone trading system is a system that does not use additional indicators to ensure a trade.
How many indicators are you using in your charts? If you’re like a lot of traders, are you using more like 3 or 4? What kind of indicators are most often used? Moving Average, Hand Drawn Trend Line, MSD, RSI, ATR, CCI, Fibonacci, Elliott Wave, Price Actions, Chart Patterns, Candles etc. Anytime we are trying to determine the price direction which will go in our favor and I am using multiple indicators. This is a flawed method even though it seems logical. The RSI itself uses processes within the RSI to determine whether a trade should be taken.
The vast majority of people do not know the value or RSI because they taught its conventional use; But conventional usage is wrong. Overbought and oversold cannot be determined by RSI or any other indicator and divergences created using RSI and / or other indicators are also faulty trading methods.
RSI New Concept # 1 – 4 RSI Trading Signals
There are 4 signals that alert the trader using RSI to change the market momentum. Without speed the trader gets lost and worse if he does not know the direction of speed. By understanding where and when these signals occur, you can both know.
RSI New Concept # 2 – RSI Range
RSI trends fall in the area of RSI and stay there until the trends change. Knowing these changes, the trader can keep an eye on a chart and instantly know where the RSI should be to maintain the trend. Knowing this gives traders additional position to enter or exit the business depending on the situation.
RSI New Concept # 3 – RSI Range Shift
When the RSI moves from one point to another it signals the end of one RSI range and the beginning of the other. These range shifts clue to the trader to map where the price is going. Knowing with a high probability that a range shift is going to happen is one of the more profitable tools for any trader.
RSI New Concept # 4 – Speed 1, 2 and 3
This fourth concept is probably the most important. There is no trade without it. Entering a business with the expectation that something will happen and that it will not happen, is the most frustrating experience for a trader as seen in Moments 1 and 2 on the RSI chart. The velocity 3 is made more predictable. Momentum 3 which makes money for the trader. Statistical information improves the probability of Momentum 3 by identifying the times when velocity occurs the most.
RSI New Idea # 5 – Level of Success
RSI or any other trading system which does not have a known target during trading is not a trading system.
These concepts are the core principles that make trading RSI a measurable and successful trading system as a standalone trading system.