3 Trading Tips for RSI

Here is the truth - the RSI as advertised here is outdated (the regular over busy reads every tick RSI without clarity as to what is next or where price is in a volatility envelope). The simplest and best RSI is the latest - and that is RSI+Bollinger bands and of the sort you can get if you look in the forums here on FF or from Forex-TSD (but has to be the one coded by the ace coder Mladen - armorer of astute traders).

The RSI on its own without volatility measures is basically impossible to read with any confidence regardless of the so-called tips intended to compensate for blind areas here. With volatility measures it is as easy as anything and and a ten year old can play the markets with me - with that tool. The point is why labor to retain and practice tips that would take eons to master when you can get a plug and play version.

This is a key tip - worth trying out.

The Crow (._.)

Volatility is the blood of markets - it measures the balance of monetary flow in direction - in short it defines the price vector and that is what you want to calculate and track for any interval.

Oscillate means to swing back and forth, There is a reason some of indicators are called oscillators. As we all know there are two moves price can produce - a trend and a range. While some indicators like moving averages can move together with trend as long as trend goes and are useful to determine trends, oscillators cannot move indefinitely with the trend, so their purpose is to measure ranges! Of course, trends very often move in channels, so that channel is can be seen in oscillator. Just use common sense instead of using and abusing outdated cliches.

Regards

With much respect I very much like your post - and a sentiment I have tried to promote but maybe I lack the english to communicate effectively.

A trend is the general tendency in the direction of anything including price. It is mathematically best expressed by a linear function and about which price fluctuates. Such flutuation is the simple and direct reflection of the cyclic nature of markets across all intervals. The trend is good to know but trading is more about timing the phases of these cycles about the trend and that is what an oscillator does. This is simply because the undepinning mentality of traders in all markets (regardless of goods sold) is to buy low and sell high - and this is the only way really there is to trade.

Unfortunately, this is not stressed enough and or made explicit in most trainer communication such that newbies enter the markets determined to trade the trend and learn the hard way that the trend is not your friend just your regular traffic policeman - your friends are in the cycles you wish to trade depending on the interval of your choice they go by names of up and down phases. This is true whether price is running a low (trend) or high (range) frequency cycle.

Nice One!

The Crow (-_-)

These indicators are all good, no doubt about that. but the fact is, they can't tell the future price movement, they can only show u what has happened. Knowing the trend of a pair is very important, which is where indicators come handy. but to make some money from trading , u just have to b pessimistic when others are optimistic.
Be a Contrarian ..

Not correct sir - they tell you the future exactly as data in real estate tell you the future. They provide you with the rate of change of price over an interval and above a threshold they show growth and below the same threshold they show decay. Now basically, when you are told price is growing the thing is you need then to project that rate over some forward period but of course at some risk (no business including real estate is without risk) and vice versa when they indicate decay. But most correctly, in order to ride waves they show you the inception of each phase in the current cycle of the interval you wish to trade and it is up to you to sense them as the accurate timing device they are.

The truth is that most traders look for cues and assurances outside these rather precise readings of market sentiment. Further they are so distracted by these outside noise they fail to have the presence of mind to understand that these indicators provide you with the information to do some calculations and act on those and that they are more accurate than anything out there - and so it is the traders fault not to see how the tool is to be deployed. Once you see that and realize they are bloody accurate your trading swagger will change for good. They tell the future sir just not the kind you see without effort because businesses do not succeed based on prophecies rather they do by taking calculated risk - these indicators provide the numbers to crunch and present you with results. It is up to you to act on them in a timely fashion.

The Crow (._.)

What you cannot measure you cannot manage effectively - as in time (enter) and control (exit).

Totally agree with Osmo and Guess (IPXX....) but in trading u gotta be like Keep It Simple as Technical Analysis is just like a compass helping u in the direction the price supposed to go but reiterating again anything can happen in the capital markets so practice cautious, practice profitability! As one of my forex mentors Kathy Lien said your a trader first, analyst second :-)!

Nice interesting posts people, I agree with what you all say but my 10 pennyworth is that I am a trader, first and foremost, I try to keep the charts simple as I can with MA's and s/r levels. But it is what works for you and makes you successful that counts. As a professional trader for over 47 years I like my system!!