How to use RSI?

Bad_Badness said:
It is one of those indicators contrarians like. Overbought-Oversold, so therefore looking for a snap back.

But the problem is straight forward. Things are overbought-sold BECAUSE they are being sold or bought. So just "following it" will give you a bunch of longs that are short lived (dead-cat) bounces and then good chances of continuations or at least retests (thereby running stops at the short term low). The extreme ones, over-under XYZ amounts, are the best and the worse. They are when you have an actual trend, and a high potential for a reversal.

Reverse for shorts, but with different momentum characteristics.

To use it, you need

0) a larger context in addition.
1) you need a trend that is ending, or not even a trend but a whipsaw reversal
2) you need to adjust your entry and exits for either a dead cat bounce or to let it run. I.e. entry exits need to be variable based on the strength. One size does not fit all.
3) tactics to deal with retraces.

Overall, just one indicator that needs about 2-4 additional indicators to filter out the false signals. When you get the right combination, then you will realize RSI is redundant and probably one of the least useful for the amount of analysis and filtering.

PS: How not to use it: It is a bad idea to take an "RSI" based trade, get a profit, then go negative, and then wait for the RSI to go again in your favor. Basically you will just be riding a wave that is against you. To high risk and MAE for the possible gains. The trade is out of sync with the market.
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%%
THAT;
+ or dont use it @ all [ignore it].
Its so wrong for so long on trends+ good trendsLOL:D:D
Frankly i could pattern a buffalow/bison\bear in polar bear regions= better patterns
 
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schizo said:
Long long long time ago when I traded stocks, I used to follow RSI(2) religiously, especially on the daily. Pretty amazing, eh? :wtf:

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LOL, actually amazing;
but that 80-20 rule is so common= no wonder.
Some front ran you with 66.6;
77.7and then realized over a long long time,, can be real useless .
I do find apples helpful; 2 apples a day tends to keep doctors aWay
 
schizo said:
Long long long time ago when I traded stocks, I used to follow RSI(2) religiously, especially on the daily. Pretty amazing, eh? :wtf:
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hilmy83 said:
It's so amazing that you stopped using it.
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hilmy83.jpg


Is this a threat?... :D
 
Waylen said:
I saw many traders use RSI to produce signal but there are also some confusion about of the use of RSI in traders. Can you please tell me how to use this indicator properly?
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When you remove RSI, then you are making progress.

Have fun using RSI
 
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