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Best Forex Indicator

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

developed ever.

 

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

simple ->

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

effective.

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