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RSI is one of my favourite indicators and I have personally used this indicator since I started trading. This indicator is really easy to use but really effective and can help you make a lot of bucks. So, let’s check out the RSI indicator.
How to set up the RSI Indicator on Pocket Option?
Once you have logged in to your Pocket Option account click on the indicator button at the left-hand side corner and select RSI Indicator from the menu.
You can change the colour of the RSI Indicator by clicking on the pencil near the indicator and selecting the light colour for better visibility.
What is an RSI Indicator?
RSI or Relative Strength Index is a technical indicator used in the Financial market. This indicator helps us to analyse the buy and sell signals of security based on the closing prices of the same.. This indicator was developed by one of the most famous names in the field of trading name J. Welles Wilder. He has invented many popular indicators like ATR, ADX & more. This indicator oscillates between 0 to 100.
The traders most typically use this indicator with a 14-day timeframe and high and low at 70 and 30. Where If the security price is above 70 the security is said to be at an overbought level Similarly, If the security price is below 30 the security is said to be trading at the oversold level.
How to set RSI Indicator on the Pocket Option?
Placing trades with an RSI indicator is just like making a cup of tea because it’s so easy. You just need to understand the basics of the RSI Indicator as this indicator helps us to identify the trends using the Overbought and Oversold levels. When the security price oscillates near or below the RSI line 30 ( Oversold level) It signals an upcoming bullish trend and you can place a buy trade here Similarly, When the security price oscillates near or above the RSI line 70 (Overbought level) it signals an upcoming bearish trend and we can place a sell trade here.
How to use the RSI Indicator effectively on Pocket Option?
When the security price oscillates near or below line 30 it signals an upcoming bullish trend and you can place a buy trade here.
Similarly, When the RSI line is near or above line 70 it signals an upcoming bearish trend and we can place a sell trade.
How to use RSI Divergence Indicator?
Trading with the RSI indicator is very easy. However, If you study the indicator properly you will notice that the RSI Divergence i.e. The indicator does not always follow the price ups and downs. Multiple times you will notice that the indicator is moving to the opposite of the security price and this is called RSI Divergence.
In Divergence, You will notice that the price is moving in the downtrend while the indicator is moving in the uptrend. Similarly, When the price is moving in an uptrend while the indicator is moving in a downtrend.
As you can see above the price is moving down but the RSI line is stepping up. It means that buyers are trying to push the market up and we can possibly see a trend reversal.
Is RSI lagging indicator?
The Relative Strength Index indicator is typically known as a lagging indicator. In case you don’t know about the Lagging indicator. A lagging indicator is a type of indicator that provides the signals based on the historical price data. So, Yes the RSI indicator falls into the lagging indicator category as it uses the mathematical formula which is based on the historical price.
Is RSI leading or lagging indicator?
This is one of the most heated arguments regarding the RSI indicator. Some experts all across the globe believe that the RSI is a leading indicator while some experts believe that RSI is a lagging indicator. In my opinion both the arguments are not 100% wrong.
RSI is considered a lagging indicator since it relies on past price data to generate signals while RSI is considered a leading indicator since it provides early signals of potential trends and reversals.
So, I have done my part. I have covered everything that was really important for RSI. However, If you planning to use Support and Resistance or Stochastic indicator for trade confirmation that won’t be a bad idea.
If you really want to understand How this indicator really works. I will highly suggest you to practice the RSI on the Pocket Option practice account and keep a track record of how many correct trades you actually made and I wish you a happy trading.