The RSI Indicator is one of the best technical indicators for traders. We have developed the Trading Strategy that uses the RSI indicator. It involves price action analysis, which will help you land great trade entries! This RSI trading strategy is as useful as the RSI 2 trading strategy, which was developed by Larry Connor.

However, this strategy strictly trades reversals that occur in the last 50 candles. Read the entire article for all of the RSI trading rules and trading tips. Understanding the rules of these trading strategies will help you trade this strategy for the highest level of success.

We also have training for the best Gann Fan Trading Strategy. Below, we will discuss the most important things you need to know about trading with the Relative Strength Index RSI indicator. Using the Relative Strength Index, you can identify whether a price trend is overbought or oversold. The RSI Trading Strategy is used as an RSI stock strategy, RSI forex strategy, and an RSI options strategy. We will discuss many things in this article, including RSI vs. stochastic indicator and why both indicators are excellent to trade with.

We will also review the stochastic RSI oscillator trading systems, stochastic RSI setting, five day RSI strategy, Connors RSI strategy, momentum oscillator systems, and binary options strategy that work with the RSI indicator.

RSI is one of the most used trend indicators you will find online. The RSI is a key component of many trend trading strategies. No one else shares how to trade it with step by step instructions. You will only find detailed instructions here. This can also be used with your forex trading strategies if it is your market of choice. RSI stands for the relative strength index. This will show you an overbought signal. This will also show you when the price is in oversold territory.

I recommend using this indicator for the RSI overbought position because it increases your win rate. Before you start trading with our entry signal, we will cover a few key tips to help improve your trade. Also, read our winning news trading strategy , for more information.

First, remember this should incorporate the daily charts to find the best opportunities. Our Strategy should be used with multiple time frames to dial in your entries and make them more accurate. Second, it is essential to use the RSI signal. You will find the price breaking critical levels for the best possible entries. If you combine this indicator with pivot points and a good candlestick pattern, you will hit trading home runs regularly. You will be shown many images in this article to learn how to sell signals or buy signals.

You will use the RSI line, also known as the RSI level, to maximize your effectiveness using this trading method. This article also serves as a beginners guide for everything related to the relative strength index RSI.

We took a lot of time to create this content with details and examples to help you become better traders. This strategy identifies a break of a trend and takes advantage of the movement in the opposite direction. Kind of like our Trend Breaker Strategy. In this article, we will review a simple trading strategy using the RSI indicator. You are going to benefit from this strategy by learning to trade divergence. Find a low-risk way to sell near the top or buy near the bottom of a trend. Swing traders attempt to capture medium-term changes in the trend over a period of a few days.

And, the RSI indicator is a great additional tool to help us gauge the constant ebb and flow of the price action. However, before we get into that, we need to make sure the RSI indicator is in tune with the medium-term swing trends. The best setting for swing trading is 20 periods.

The RSI 20 periods encompass a full month of price action activity, which is just enough to be in tune with the medium-term trends. The RSI swing trading strategy revolves around trading RSI trendline breakouts. The break of the RSI trendline will be used as a buy and sell signal as follows:. For intraday signals, we need to make the RSI indicator more sensitive to the short-term price action. Otherwise, you might end up with a fast-paced RSI that is not that reliable.

Plot the 4 periods RSI over the 9 periods RSI on the same window and watch for buy and sell crossover signals. You probably never heard you can overlay two RSI oscillators with different periods on the same window. But, this is possible with most trading platforms including TradingView and MetaTrader 4. They also deserve some nuggets. Although crypto traders can easily use the above RSI trading strategies, we have something that is adjusted to the volatility of the cryptocurrency market.

If you want to learn more about it, make sure you click here: Amazing 2-Period RSI Day Trading System. The RSI indicator is one of the most popular indicators used by traders in any market, such as stocks, foreign exchange forex , futures, options, and more.

What is the RSI Relative Strength Indicator? This indicator was developed by Welles Wilder around It quickly became one of the most popular oscillator indicators for traders in financial markets.

This momentum indicator can fluctuate between 0 and providing overbought and oversold signals. The formula for this indicator is a bit complex:. I could explain this whole process to you. However, I will spare you the details. I want to share this with the mathematicians that are reading this and enjoy equations.

You can do a quick google search if you would like to learn more. The default settings for this indicator is a smoothing period of We are going to change that setting to 8. Make sure you turn this setting before you jump into this strategy. The reason I prefer eight instead of 14 is because the RSI will be much more responsive.

This is critical when we are looking for overbought or oversold conditions and readings. Also, go into the RSI setting and change the lines in the indicator to 80, You will learn more about this later. This indicator will be the only indicator we use for this strategy. This is because we have a strict set of rules to follow before entering a trade.

And these rules will, without a doubt, validate a reversal for us to open a trade. Below is another strategy on how to apply technical analysis step by step.

Before you use this strategy, make the following changes to the RSI indicator:. The Trading strategy can be used for any period. This is because there are reversals of trends in every period. This can be a swing trade, day trade, or a scalping trade. As long as it follows the rules, it is a valid trade. We also have training for Forex Basket Trading Strategy.

In this step, we only need to ensure it is the low or the high of the last 50 candles. This is a USDCHF currency pair and will be a BUY trade. Once we determine this low or high, then we can move on to the next step. I drew vertical lines on the price chart so you can see the 50 candle low that we identified. If you need to use horizontal lines on your chart to verify that the candle has closed the lowest of the last 50, you can do so.

This is not necessary but may be helpful for you to do and see how strong the trend is. When we find a 50 candle low, it needs to be coupled with RSI reading of 20 or lower. Below we have a reading that hit the 20 line on the RSI and was the low of the last 50 candles. Once we see that we had a low, the last 50 candles, and the RSI is BELOW 20, we can move to the next step. Remember that this strategy is a reversal strategy. It is going to break the current trend and move the other direction.

The second price low must be below the first low. Although, the RSI Trading indicator must provide a higher signal than the first. Remember that divergence can be seen by comparing price action and the movement of an indicator. If the price is making higher highs, the oscillator should also be making higher highs.

If the price is making lower lows, the oscillator should also be making lower lows. If they are not, that means price and the oscillator are diverging from each other. We have rules in place that will capitalize on this divergence so that we can make a significant profit. Keep in mind that this step may take time to develop. It is very important to wait for this second low because it gets you in a better trade making position. That is the Divergence. Remember that our example is a current downtrend looking to break to the upside.

If this was a 50 candle high, we would be looking at the exact opposite of this step. Once this criterion has been met, we can go ahead and look for entry. This is because the charts are showing us that a reversal is coming soon. The way you enter a trade is very simple. You wait for the price to head in the direction of the trade and wait for a candle to close above the first candle that you identified that was previously 50 candle low.

If you are struggling with this step, save the picture for reference. This will help guide you when looking for a trade. To place your stop, bump back 1 to 3 time periods and find a reasonable, logical level to put your stop.

You are looking for prior resistance, support. We placed our stop below this support area. That way if the trend continued and did not break, it could hit this level and bounce back up in our direction. I recommend you follow at least a 1 to 3 profit vs.

risk level. This will ensure that you are maximizing your potential to get the most out of the strategy. You can adjust as you wish. Keep in mind that most successful strategies that identify breaks of a trend use a 1 to 3 profit vs.

Here you can learn how to profit from trading. If you have questions or comments about this trading strategy you may reach us at info tradingstrategyguides. The RSI Trading Strategy is great and is fairly simple to learn. However, counting 50 candles is a bit monotonous.

This is one of the many reasons we have developed the EFC indicator that trades this strategy for you! If you would like to see a complete guide to the EFC indicator we wrote an article about it here!

Please leave a comment below if you have any questions about RSI Trading Strategy. Also, please give this strategy a 5 star if you enjoyed it! We also recommend taking some time to learn about our mean reversion trading strategy. We specialize in teaching traders of all skill levels how to trade stocks, options, forex, cryptocurrencies, commodities, and more. Our mission is to address the lack of good information for market traders and to simplify trading education by giving readers a detailed plan with step-by-step rules to follow.

I have been back testing this strategy for the last week. Thanks Guys! I am grateful for your Trading strategy guides RSI divergence strategy. It is a no holy grail but coupled with a sensible money management and understanding of price action, it definitely indicates the picks and troughs of the rhythm of the market.

My advise is, even when there is a confirmed divergence between RSI and price, buy signals in an uptrend and sell in a downtrend. Thanks for educating us. God bless. Would like an indicator that doesn't lag with high reliability with in terms of generating entry signals with minimal false positives. I personally enjoy Simple graphical type indicators like arrows and bars changing colors to tell me which way to take my next trade.

Thank you. What I look forward to seeing on an indicator is one that would be able to help me avoid chop, Most indicators are able to get one into or out of trade but are just dumb when it come to market chop. So my ideal indicator would be able to give me warning of the beginnings of a chop. It can weigh up all the factors and give a suggested probability rating so the trading can decide on his own whether or not to be conservative.

Interesting strategy. Have used RSI to verify what price action is telling me, but not with 50 period low or high. Fakeouts are a big problem. I'll try this strategy. The most important feature for me would be to get consistent results under all market conditions, i.

reliability that can be trusted at all times. In this way we are able to begin the analysis and wait for proper entry in advance. On your question about the unique feature I'd love to see in an indicator, what I'd love to see in an indication is an additional feature to auto-trade, i.

e enter the trade when the entry conditions are met. You only have to set lot size and put it on auto trade. This way, it can enter the trade and then send you an alert of trade entry, and you can then look at it and set your stop loss, trailing stop and take profit levels. Alternatively you can indicate take profit and stop loss levels in terms of percentage or pips as well as the lot size lot.

This will really be cool. I want an indicator to be consistent. Once an indicator fails to be reliable, it is doomed for me. But if it is reliable, I trust it and it becomes a valuable asset. Much gratitude for this beautifully simple and straightforward reversal strategy, very clear and easy to follow explanation from start to finish can't wait to test it once markets open up again after the weekend. I have been using a similar rsi divergence strategy, The EFC indicator you have created looks very interesting.

Finally, some divergent patterns are more stronger than others, so maybe an indication of the divergence strengh, especially if the upper timeframes are in divergence. Again, the EFC indicator looks very promising, just shared my thought of it could be even greater for my personal use.

Thanks for the good work. I have 2 suggestions for indicators, the first would be an addition to EFC of coloured box which measures back 50 periods and set to max min price for that 50 period rather like price channel does although not chopping around like price channel , that box could then indicate a potential breakout of price action with the aid of a spot or arrow or change of bar colour. I also like the idea of keeping non essential bars of neutral colour. I think the main indicator i would to have available for MT4 is market profile based on volume showing the POC and min max of key price area.

Watched a wonderful demonstration of this yesterday in a webinar but it is not designed for MT4. Thank you, Tony. Being as a Full Time Trader FTT , trend is very important to me. It will show me very clear where my destination is. For good and sharp entry, i need a firm and precise momentum indicator. Combination both of these will definately give me a very good trading strategy.

For RSI, i rely on this setup:. It seem this system have both of it. And been translated into much more easier and friendly way for any type of trader.

It just that as an additional, these system need to be equipment with any other supporting trend indicator in order to identify the market is trending or ranging.. As for myself i use MA Channel to support this trading system. I like this strategy just what I have been looking for thanks very much for your hard work. Best Regards Graham. RSI is a simple indicator. With your trading strategy, it will be good to develop the system rather than manually plotting and looking at the conditions.

I think you have a great informative site, so keep up the good work but the proof is always in the pudding. Ok - I jumped in and bought the indicator - it looks just like the example below. My only disappointment is the candles don't "stay" so if you leave and want to check back later the trade disappears once TP target is hit.

Also the TP line is not always visible on the chart while the trade is in progress and it doesn't "paint" in arrears for visual back-testing - so you need to be "in the moment" to "see" how the trade pans out - I'm not sure how to find the TP line if you can see it - you may be able to open the "objects" and see the value there and enter that number into your trade Best to keep the non-strategy candles and chart features as monochromatic i.

black and white or grey against a white background so that, during a trawl through the charts and time-frames, the sudden colour inject into the picture is much more instantaneously attention-getting.

Really looking forward to getting this indicator. Just one question relating to last 50 candles, I presume it is last 50 or more candles and not necessarily exactly 50 candles back? Very grateful for all the great training! I look forward to trying it. Please don't sell it via Clickbank, JVZOO or Clicksure. Their new policies on refunders mean that many of us in fact almost all of us in my Skype Group have been blacklisted for refunding scamster indies and EA's. I don't run it. It's called YTR ex "Your Trading Room" and Vertue Traders both were scam defunctionary - the principals evaporated and the trainee prop traders were left in the lurch - having paid many thousands.

Australian regulator ASIC is totally toothless and disinterested in retail trader scams. Oh yes I remember that group. Terrible to see that happen, hopefully some of the traders were able to continue and find success in your trading.

This is just the strategy of trading that I recently stumbled upon as I examined several chart formation and changes in trend both short term and long term. Your indicator will serve a great purpose of automatically finding those spots of change and making trading a delight that it should be! Just me but like lot of comments, I've been through the indicator jungle.

Settled on a few custom ones via ThinkorSwim. What I like about this EFC indicator is it seems to incorporate candle coloration of a temperature kind. Follows a logic hot to lukewarm to cool. In heat of the day it can't easy to get twisted around when money on the line so a 'fast glance' 4 color system really helps. Should go well with the many strategies you've offered.

I'd like to see you backtest using a smaller stop loss rather than the obvious one. I am much more interested in lower drawdown rather than a high winning percentage.

I prefer to trade daily and 4 hour charts. How well does your indicator perform on these historically? Looking forward to reviewing your new to be released indicator. You have a good track record of putting out good easy to understand strategies that are profitable. The bar is set high! Love the strategies you guys post this 80,20 strategy is very simple to apply and wit a little patience to wait for the rules to be met i can see this strategy can be very profitable. Thanks guys for taking time to trace.

This looks really good. Just what a newbie needs to improve understanding and results, Thank you for your efforts. If the EFC Indicator's basic premise is to clarify which way to trade and WHEN, I'd see that as being halfway there. Married to a sane breakeven philosophy, it would restore the below average retail trader's faith in ultimately getting to the positive side of the ledger for a change. Divergence with RSI alone seems like something that I can do with Maybe this keep it simple method is the ONE we've been waiting for.

Hello, strategy is built on simplicity, which I personally prefer. Definitely I try tomorrow, looking forward to the novelty will be interesting: D. The 30 and 70 lines indicate oversold and overbought respectively in the standard RSI interpretation. But they are not the only lines you should observe. Another equally significant level is the midline at If the RSI remains below 50, a bearish market is dominant.

Both setups combine a moving average with the RSI indicator. However, they are not gunning for the same trades. Study them side-by-side to uncover their differences. One important principle for the Failure Swing is that it is independent of price. The implication here is that you should ignore the usual RSI divergences. These two articles have excellent sections covering RSI Failure Swings. For each link below, you need to s croll down to the Failure Swings section.

The RSI allows for direct trend line analysis. It means that you can draw trend lines on the RSI just like what you usually do for price action. This article from Trendline Mastery shows a detailed RSI trend line trading example using multiple time frames from the weekly down to the 4-hour chart. Andrew Cardwell developed a framework to categorize market conditions with the RSI.

The premise is that the RSI is typically trapped within a range, given a market mode e. Think of it as an advanced version Strategy 4 above that uses the RSI midline.

The first chapter of this book by Constance M. Brown is titled Oscillators Do Not Travel Between 0 and It covers the concept of RSI range shifts. Here are seven trading strategies that can empower your RSI analysis.

But do not try to apply them all at once.

by TradingStrategyGuides Last updated Jan 31, All Strategies , Indicator Strategies , Most Popular comments. The RSI Indicator is one of the best technical indicators for traders.

We have developed the Trading Strategy that uses the RSI indicator. It involves price action analysis, which will help you land great trade entries! This RSI trading strategy is as useful as the RSI 2 trading strategy, which was developed by Larry Connor. However, this strategy strictly trades reversals that occur in the last 50 candles.

Read the entire article for all of the RSI trading rules and trading tips. Understanding the rules of these trading strategies will help you trade this strategy for the highest level of success.

We also have training for the best Gann Fan Trading Strategy. Below, we will discuss the most important things you need to know about trading with the Relative Strength Index RSI indicator. Using the Relative Strength Index, you can identify whether a price trend is overbought or oversold. The RSI Trading Strategy is used as an RSI stock strategy, RSI forex strategy, and an RSI options strategy.

We will discuss many things in this article, including RSI vs. stochastic indicator and why both indicators are excellent to trade with.

We will also review the stochastic RSI oscillator trading systems, stochastic RSI setting, five day RSI strategy, Connors RSI strategy, momentum oscillator systems, and binary options strategy that work with the RSI indicator.

RSI is one of the most used trend indicators you will find online. The RSI is a key component of many trend trading strategies. No one else shares how to trade it with step by step instructions. You will only find detailed instructions here.

This can also be used with your forex trading strategies if it is your market of choice. RSI stands for the relative strength index. This will show you an overbought signal. This will also show you when the price is in oversold territory.

I recommend using this indicator for the RSI overbought position because it increases your win rate. Before you start trading with our entry signal, we will cover a few key tips to help improve your trade. Also, read our winning news trading strategy , for more information.

First, remember this should incorporate the daily charts to find the best opportunities. Our Strategy should be used with multiple time frames to dial in your entries and make them more accurate. Second, it is essential to use the RSI signal. You will find the price breaking critical levels for the best possible entries. If you combine this indicator with pivot points and a good candlestick pattern, you will hit trading home runs regularly. You will be shown many images in this article to learn how to sell signals or buy signals.

You will use the RSI line, also known as the RSI level, to maximize your effectiveness using this trading method. This article also serves as a beginners guide for everything related to the relative strength index RSI. We took a lot of time to create this content with details and examples to help you become better traders. This strategy identifies a break of a trend and takes advantage of the movement in the opposite direction. Kind of like our Trend Breaker Strategy.

In this article, we will review a simple trading strategy using the RSI indicator. You are going to benefit from this strategy by learning to trade divergence.

Find a low-risk way to sell near the top or buy near the bottom of a trend. Swing traders attempt to capture medium-term changes in the trend over a period of a few days. And, the RSI indicator is a great additional tool to help us gauge the constant ebb and flow of the price action. However, before we get into that, we need to make sure the RSI indicator is in tune with the medium-term swing trends.

The best setting for swing trading is 20 periods. The RSI 20 periods encompass a full month of price action activity, which is just enough to be in tune with the medium-term trends. The RSI swing trading strategy revolves around trading RSI trendline breakouts.

The break of the RSI trendline will be used as a buy and sell signal as follows:. For intraday signals, we need to make the RSI indicator more sensitive to the short-term price action.

Otherwise, you might end up with a fast-paced RSI that is not that reliable. Plot the 4 periods RSI over the 9 periods RSI on the same window and watch for buy and sell crossover signals. You probably never heard you can overlay two RSI oscillators with different periods on the same window. But, this is possible with most trading platforms including TradingView and MetaTrader 4. They also deserve some nuggets. Although crypto traders can easily use the above RSI trading strategies, we have something that is adjusted to the volatility of the cryptocurrency market.

If you want to learn more about it, make sure you click here: Amazing 2-Period RSI Day Trading System. The RSI indicator is one of the most popular indicators used by traders in any market, such as stocks, foreign exchange forex , futures, options, and more. What is the RSI Relative Strength Indicator? This indicator was developed by Welles Wilder around It quickly became one of the most popular oscillator indicators for traders in financial markets.

This momentum indicator can fluctuate between 0 and providing overbought and oversold signals. The formula for this indicator is a bit complex:. I could explain this whole process to you. However, I will spare you the details. I want to share this with the mathematicians that are reading this and enjoy equations. You can do a quick google search if you would like to learn more. The default settings for this indicator is a smoothing period of We are going to change that setting to 8.

Make sure you turn this setting before you jump into this strategy. The reason I prefer eight instead of 14 is because the RSI will be much more responsive. This is critical when we are looking for overbought or oversold conditions and readings. Also, go into the RSI setting and change the lines in the indicator to 80, You will learn more about this later. This indicator will be the only indicator we use for this strategy. This is because we have a strict set of rules to follow before entering a trade.

And these rules will, without a doubt, validate a reversal for us to open a trade. Below is another strategy on how to apply technical analysis step by step. Before you use this strategy, make the following changes to the RSI indicator:. The Trading strategy can be used for any period. This is because there are reversals of trends in every period. This can be a swing trade, day trade, or a scalping trade.

As long as it follows the rules, it is a valid trade. We also have training for Forex Basket Trading Strategy. In this step, we only need to ensure it is the low or the high of the last 50 candles. This is a USDCHF currency pair and will be a BUY trade. Once we determine this low or high, then we can move on to the next step.

I drew vertical lines on the price chart so you can see the 50 candle low that we identified. If you need to use horizontal lines on your chart to verify that the candle has closed the lowest of the last 50, you can do so.

This is not necessary but may be helpful for you to do and see how strong the trend is. When we find a 50 candle low, it needs to be coupled with RSI reading of 20 or lower.

Below we have a reading that hit the 20 line on the RSI and was the low of the last 50 candles. Once we see that we had a low, the last 50 candles, and the RSI is BELOW 20, we can move to the next step. Remember that this strategy is a reversal strategy. It is going to break the current trend and move the other direction. The second price low must be below the first low. Although, the RSI Trading indicator must provide a higher signal than the first.

Remember that divergence can be seen by comparing price action and the movement of an indicator. If the price is making higher highs, the oscillator should also be making higher highs. If the price is making lower lows, the oscillator should also be making lower lows. If they are not, that means price and the oscillator are diverging from each other.

The best setting for swing trading is 20 periods. I like the clarity of your presentations, keep up the good work. Mathew Hay says:. We took a lot of time to create this content with details and examples to help you become better traders. If the price is making lower lows, the oscillator should also be making lower lows.

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