Trading with rsi index

External question — Personal Finance Stack Exchange Author: Reddit User Original post: https://money.stackexchange.com/questions/125451 License: CC BY-SA 4.0 — https://creativecommons.org/licenses/by-sa/4.0/ Adaptation: HTML converted to plain text; contact email addresses removed. Is the rsi index used for only day trading or it can be used for long term of few months/days/week? How reliable is it in your experience?

External answer — Personal Finance Stack Exchange Author: Bob Baerker Original post: https://money.stackexchange.com/a/133608 License: CC BY-SA 4.0 — https://creativecommons.org/licenses/by-sa/4.0/ Adaptation: HTML converted to plain text; contact email addresses removed. Because the RSI calculation involves a ratio, it eliminates the problem of needing large amounts of historical data. But because a ratio is used in its calculation, it is more volatile and erratic. Shorter RSI periods result in more timely signals along with a larger number of whipsaws. Longer RSI periods result in fewer signals which are less timely and less profitable because of delayed entry and exit. Here's the catch with technical indicators like RSI. They can provide information like support and resistance, trend, and current momentum but they are just reflection of past price and they predict absolutely nothing going forward. It's like looking in the rear view mirror to see where you have been. Any trade taken based on them is based on the hope that the trend continues.