Post Top Ad

Wednesday, 17 October 2018

6 Ways to Get Maximum Gain from the RSI Indicator

How to get maximum profit from the RSI indicator

De facto community trade applies RSI indicators to determine the level of overbuying / overselling levels in the market. Even without using additional filters, the indicator works well. Have a look at the implementation of the RSI which even further increases the accuracy of the indicator.
standard way to implement RSI:

First, the traditional way - buying options when the RSI exits the overbuying / overselling zone.

  • when the RSI value of the line gets lower than the overselling level of 30% usually, the bear weakens the strength and that means, coming out of the indicator of this zone is the right time to open a position to raise;
  • when the value gets higher than the overbuying rate of 70% usually, one needs to consider the variant entering on the decline.

Buying a choice is a tight operation that will be given only by the time when the indicator exits overselling / overbuying the zone.

RSI for a small period

Method 2. If you trade turbo or binary options with an expiration time of less than 30minutes, 70 and 30 levels are not always possible to execute accurate enterings. The period must be reduced for indicators to achieve extreme values more often. For a period of less than one hour the RSI equals 5 and 90 to 10 or even 95 to 5 levels.
Examples of Rsi settings for 90/10 and 5 periods:

Method 3. For additional approval you need to pay attention to a higher period to see global trends. Binary options trading against trends is a bad idea, so signal direction at the current time period and one above must match together.
That is how the approve signal looks at 1 minute and 5 minute charts:

The period and level of the RSI must match together on both charts.
Method 4. There is a scalping technique for supershort offers. This trading method is often applied by American traders. The feature of this strategy is to get a large number of signals over a small period of time. The main goal is to really minimize the response time of the indicator.

  • RSI period is equal to 2 bars;
  • Overbuying limits are also set to the maximum possible - 99 for overbuying and 1 for overselling.

As usual, this strategy is used on the M1 or M5 charts. the expiration time of binary options usually does not exceed 5 minutes.

RSI Divergence

Method 5 - searching for divergence on the graph is an effective method for getting RSI signals. Divergence is the difference between a graph and a value indicator, for example when the chart draws higher and the indicator shows a lower maximum.
Examples of divergences - the maximum two on the chart are at the same level when the second maximum chart indicator is much higher:

Things to keep in mind - You need to believe what indicators show, if they grow - we buy CALL options, if reduced - PUT.

Example entering position based on RSI divergence:

RSI & Bollinger Bands

The last, way 6 - to combine RSI indicators and Bollinger Bands, because the first shows impulsive movements and the second shows the main direction of market movements. As a result, we get the signal to enter the position very precisely.
Trading rules at RSI are quite standard. PUT purchases are selected with the time indicator line coming out of the overbought zone, or CALL option, when the indicator line exits the oversold zone. But one must enter only in case the price is located near the bottom line of Bollinger Bands, which must act as a filter. Ideally, the price must exactly overcross the line when receiving the RSI signal.
In the case of the –°all signal, the opening price of the candlestick breakout must be above the line. The closing price above:

All the same things apply to PUT-signals, in this case the price with it must simultaneously pass the upper line of the channel - higher opening price, lower closing price (inside the channel):

End of time can vary depending on the time period used. Ideally, the expiration time must be the same as the number of bars needed to reach floating average (the average line of the channel) from the edge of the channel. One might calculate the average number of bars needed to pass distances from one end to another and divide by 2.

Related Post

Post Top Ad

Your Ad Spot