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Top 3 RSI indicator strategies for informed decisions

RSI indicator is the best choice for forex traders. Indicators are the software or files that show the unique trading trends and history of the specific products in an understandable form. If you are a newbie in trading, you must take the help of these tools.

Among these fundamental indicators, the RSI indicator is the best one discussed in this article.

What is the RSI indicator?

RSI indicator presents data related to a product’s prices in the past in the form of a chart and predicts its price in the future. It fluctuates between 0 and 100.

If the RSI is below 30, the market is more favorable for purchase, or it is called oversold.

The market is considered overbought if the RSI is above 70 and is a peak sells time.

In this way, the RSI indicator provides the statistics to the end-users and facilitates them in informed decision-making.

How does the RSI indicator work?

RSI indicator works based on its default number. It calculates this number by the number of bullish (above) and the number of bearish (below) candles divided by the number of previous candles.

The most favorable default period is 14. Experts perform their trading tasks by setting their RSI to 14. If you set the RSI below 14, it becomes more sensitive, and the chances of a higher number of oversold and overbought peaks increase.

The less the default number, the more precise will be the RSI indicator.

Top 3 RSI indicator strategies:

Trading is entirely based on the best strategies. If you are working on your planned strategies, you are successful in trading. But if you do not have any, you have to bear the loss.

Here I am coming up with the best trading strategies

Strategy 1:

The first strategy is quite simple. The RSI indicator displays the chart between 0 to 100. When the index reaches below 30, make a purchase, and when it reaches above 70, sell the product.

It makes takes hours, or you may miss an opportunity while sleeping. For all this confusion, a specific tool is available. This tool gives you two options: take profit and stop loss. Set the stop loss below 30 and take profit above 70 so whenever the graph reaches the oversold or overbought extremities, it will automatically purchase or sell the product.

Strategy 2:

Larry colors propose the second strategy. According to this strategy, the trading platform will buy the stocks when:

  • RSI is set to 2
  • The indicator oscillates between 10 and 90
  • The price is above SMA (200)

This strategy is extremely useful for precise decision-making.

Strategy 3:

The next strategy is known as the divergence strategy. You must be able to predict the possibility of graph reversal. For instance, if the indicator shows the graph in a downward direction, but you sense the chances of upward divergence by analyzing previous trends, you can decide effectively by investing or selling the stocks.

Best RSI settings for 5 minutes chart:

The best RSI setting for 5 minutes chart is 14. Experts use this setting to make good profits, but some also do not like this figure, so they set their RSI between 2 to 8.

If you are a beginner, set your RSI indicator between 7 and 14. It provides you with better opportunities to make profits.

Best MT4 indicators:

Here I will disclose the best metatrader indicators that you can download for free.

These are proven trading indicators that work on the principle of trend indication. They provide the market trends to the end-users with the assistance of which users can make an informed decision.

  • ADX
  • ATR
  • EW1
  • RSI
  • MD

These are a few indicators that you can download for free on the MT4 app.

Conclusion:

This article is about RSI indicators. As I mentioned above, indicators facilitate users in trading. They provide useful data and perform effective calculations to predict future trends. The data is easy to read as it is in charts and graphs.

 Among all these indicators, RSI indicators are the best because their predictions are up to the mark, and most of the cases generate huge profits. The amazing part of these indicators is you can download MT4 indicators for free.

What do you think?

Written by Kesara Bandaragoda

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