You're essentially calculating the average gain over the last 10 periods or over the last 10 days if you’re trading on a Daily chart. Let's use a 10-period RSI to make things simple. Looking at the formula, the first question is what is the average gain? Let me give you a very simple example. Then we’ll look at how you can use this indicator for your own trading. Let me walk you through step by step and explain to you why the RSI indicator is a momentum indicator. “Oh man, Rayner I suck at math, why did you show this to me?”ĭon't worry this is very simple to understand, even a 10-year-old can do it.
This is the breakdown of the RSI formula:ĭon't be alarmed by it. This is a momentum indicator, so let me prove it to you. RSI stands for Relative Strength Index and it's an indicator, a momentum oscillator developed by J. How to time your exits before the market reverses against you.How to time your entries with precision.The best market to use the RSI indicator since not all markets are created equal, some of them are very suited to apply the RSI indicator due to the characteristic of the market (I'll share with you which market it is).How to increase the probability of your winning trade using this one simple technique (that I've never seen anyone talk about).The truth about the RSI indicator and why it's not just about overbought or oversold.In today's video, I’ll be discussing the RSI indicator also known as the Relative Strength Index.
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