Earn High By Using Best Ever Forex Indicator
Forex Market is volatile. It has been said thousands of times and it is the very basic reason for
multitudes of opportunities hiding there to make huge profits. What one needs is proper understanding
and ways to navigate the stormy seas!! Now as there are markers in everything around the world to
make it easy to navigate those areas whether it is sea voyage or airways; similarly Forex Market has its
markers for understanding the path of the trend.
These markers are called indicators. They are of various kinds. Can be used individually as well as in
pairs. The one we are going to tell you is the most commonly used but the most effective indicator
We are talking about the RSI indicator. RSI refers to the Relative Strenght Index and it is a momentum
indicator. RSI measures the magnitude of change in prices that happened recently to evaluate
overbought or oversold conditions in the price of a stock or other assets. It is plotted through an
oscillator (a line graph moving from one extreme to another) with a value between 0 to 100.
Generally, if the RSI of any stock is above 70 it indicates that the commodity is going into the zone of
overbought commodity and thus may be prone to a reversal of trend or pullback. If the RSI is below 30
that means it is being oversold.
RSI can be calculated in two-time frames – one of 14 day period and secondly in 25 days period. Also, it
gives the flexibility of devising your time frame and experiment with the calculations. The formula is very
RSI = 100 – (100 / (1+RS))
Where RS = Average gain / Average loss
This is the general formula. For more details into it, you can look up the blog. What RSI indicator tells is
that when an asset has traded “too far” in one direction (selling/buying). RSI is also termed as sentiment
indicator meaning it identify bearish and bullish shifts in the forex market.
What makes RSI most trustworthy is that since it’s inception in 1978 by J. Welles Wilder Jr. in his seminal
book of 1978, “New Concepts in Technical Trading Systems” it has stood the test of time. Technical
analysts and traders are using this indicator for a long period and still trusts it’s outcomes. It shows its
strengths in its ability to indicate potential reversals with overbought/oversold situations and
bullish/bearish divergence conditions.
Another great thing about the RSI indicator is that combined with other momentum indicators like
MACD (Moving Average Convergence Divergence), it gives the most accurate indicators towards the
forex market making it highly useful in intra-day trading. Since RSI can maintain overbought readings for
quite some time, it is easy to use by freshers in the forex market. RSI is so easy for day traders, that
freshers can also test various parameters or educate themselves by the proper indicators of the RSI.
Once you master this indicator, you can develop the ability to indicate where the price is trending and in
which direction along with confirming the best price for entering and exiting the trade.
RSI has other benefits like indicating the most active time-frame, determining key price levels of support
and resistance, technical trend information, buy and sell signals, and more. If you are looking for a good
and smart indicator for better profits, RSI is recommended. It has been recorded in the past that RSI
strategies can be complemented to any Forex trading strategy thus making it highly universal and