Trading with rsi index
Trading with rsi index
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Reddit User · External communityPost link
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/
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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?
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Bob Baerker · External communityPost link
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/
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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.
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Quoted from Forex.com.bd-Editorial External answer — Personal Finance Stack Exchange Author: Bob Baerker Source score (net votes, not local likes): 1 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.
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