You guys have all heard the phrase buy. low sell excessive that’s the way you get profit. in day trading however you came here to. study about the rsi and how to use it. correctly so. on this video i’ll present you why. shopping for at 30 and. promoting at 70 just isn’t the means in which to take a glance at. the rsi. welcome back to the channel everybody my. name is artie and this. is the transferring average a present the place we. talk about all issues day buying and selling to. maintain you worthwhile on a consistent. foundation so the rsi. or the relative power index is an. indicator used on trading view and. totally different platforms exhibiting you the. overbought and oversold ranges of. any market this is the standard way. of taking a look at it. so when a market is overbought it ought to. theoretically go down and when a market. is oversold. it should theoretically go up that is why. all people says that you ought to purchase.
At the 30 stage and sell at the 70 degree. now if you watched yesterday’s video you. know why that is the worst potential. thing that you are in a position to do. especially with poor threat management. like me. so let’s jump into trading view i am. going to show you precisely the way to use. the rsi indicator okay so euro usd. is probably the most generally traded forex. pair so that is always going to be my. instance. to find the relative energy index. you’re going to go to the higher toolbar. proper right here click on. on indicators and sort in rsi you are. going to get. relative power index in the builtins. put a favorite by it as a result of it is very. useful. that method it’s going to be in your toolbar on. normal it reveals. as this purple line ranging from two. ranges from. 70 all the way down to 30. 70 indicating. an. overbought market and 30 indicating an. oversold market.
So this could clearly show people hey. it is oversold you should buy hey it’s. over bought. it is in all probability going to go down when. wanting at the rsi. flippantly yes this appears to be the case. but the relative power index is not. a sign on when the market is. going to. reverse the relative power index. shows the strength of the motion. due to this fact the energy of the motion. reveals momentum in that direction so the. rsi ought to be used as a momentum. indicator so just to show you an instance. of what i’m talking about. we see this downward momentum appropriate. however we’re additionally. low on the rsi at present sitting under. the 30 level. so historically when you have been to take. this you are thinking the worth is going. to go. up and you then get screwed because. it’s a momentum indicator it shows. momentum. in that path so despite the very fact that that is.
An oversold market. the market continues to be selling and also you. do not know when that’s going to stop. so let’s examine what would have occurred if. you’ll have purchased proper here. at this degree let’s say you need to. place an extended position. goal just above the closest high with. your cease losses at a one to 2 threat to. reward ratio. and going via the motions begins to. go up. individuals are enthusiastic and what do you. know it starts to go down as a end result of the. momentum. is in that direction now look at the rsi. it hit this low degree started to come up. and then continued down. trading far beneath the 30 stage which is. theoretically oversold going all the means in which. all the method down to the 14 stage. now had you traded this in the reverse. course. you would have landed 52 pips instead of. shedding the 15 that you did. so what i really need you to do is go.
And change the settings. of this indicator should you hover over the. indicator it has a few icons subsequent. to it you’re going to click. on the settings button and you’re going. to vary the levels. as an alternative of displaying 70 and 30 you might be. going to alter these to. 50 and 50 that means between. the 70 and 30 mark now this is just a. private choice however i will. change it to a stable line. so it is extra visible and i’ll. make that line slightly bit. fatter and going with the color scheme. of the channel. this rsi is now going to be yellow. okay now check out this should you. take into consideration. the 50 stage because the downwards pattern and. upwards. trend displaying momentum above 50 that means. that the momentum is. going up and displaying a location under 50. is meaning that the momentum goes. down now should you again. take a look at this and take a glance at the value action. [newline]In the historical past. you will notice that when the value is. under. and angled down the momentum is down and. this. is the course that you’ll. take your trades not the fact that the. market is overbought or oversold. but the reality that it’s stepping into that. course. but the rsi shouldn’t be traded as a. standalone. indicator all it does is show you. momentum you need a minimum of a trendline. or a shifting average to level out you the. actual course. so that is euro usd one. hour candlesticks with a 21 day moving. average. you presumably can clearly see that the worth is. sitting below the 21 day moving average. showing a clear and concise downtrend. value breaking through that 21 day. transferring common and then persevering with on. the draw back. so merely using this shifting common as. your indication of where the worth is. going. a small correction proper here when you’ve.
Seen my fibonacci retracement movies. linked right right here. breaking below the transferring average again. and that’s whenever you take a glance at your rsi. you’re like cool. it is broken beneath that moving common i. assume it’s going to proceed down. what is the rsi telling me yes clearly. it is beneath the 50 line. meaning that it’s going down to the. oversold. area so as it breaks and retests. this transferring common you can comfortably. get in on a position. say for instance right here we had a quantity of. exams. of the transferring average after which right. here we printed an engulfing. bearish candle wait just a little bit. for the subsequent candle to show. that continuation of the path put. your brief place. cease losses just above that shifting. common. and once more rocking the trade down till. there is a break in market construction. which occurred right about right here.
So you’re looking at a hundred and forty pips on this. commerce. so have a look at the development put up a moving. common and see which course the. value. is going use the rsi as a momentum. indicator exhibiting the course that the. worth goes to go. and if it’s under or above the 50 line. place the trade in accordance. with that i actually like indicators as a outcome of they. allow you to make that committed decision of. getting into a trade. in conjunction with your technical. evaluation. indicators are used as instruments now should you. actually want a helping hand. showing exact entry candles goes to. allow you to get probably the most profit out of every. trade. one of my favourite indicators to make use of is. pip hunter and when you overlay this on. the worth motion proper now. showing a inexperienced cloud for bullish. movement. and a pink cloud for bearish movement it. additionally provides you. white and blue stars exhibiting a.
Continuation of the motion to the. downside with a white star. and going up with a blue star in order you. can see right here we were just taking a look at. this the value was going up it broke. via the shifting common. it retested and then started to come back. down. you bought this good white star to indicate. a sell place. so theoretically you can have already. gotten in on the commerce right here. but for example you wanted to wait and see. where the value motion was gonna go. it came down broke by way of again and. this right right here was that bearish. engulfing candle that we saw but the pip. hunter indicator. printed a white star proper right here. signifying a earlier entry so that you just can. get in on this trade. so let’s put our brief position there. and once more stop loss just above that. candle now this downtrend continued and. it showed. massive strength as a outcome of one which exhibits.
Massive power. these candles really flip white then. as quickly as that momentum ends it prints a blue. candle displaying upwards motion. so if we take this commerce from sign to. signal from star to star. we might have gotten a whopping 198 pips. simply off of this one trade. so every little thing lines up completely we have. a downtrend. we’ve our signal rsi is below the 50. right right here. we rock the trade till we get the. opposite signal. every thing is made simple for you and. that is how you have to use the rsi as a. momentum. indicator so if you guys want more. information on this indicator the links. are within the description. below and as of yesterday i now. formally have a discord group general. chat i provide free trading signals for. forex every single day so come join the. neighborhood the hyperlinks are down below. i’m gonna be in there virtually all day.