Three amazing use of RSI indicator

Forex market is the largest financial market in the world and every day more than $ 4.5 trillion is traded across the globe. If you intend to participate in this market you must develop your trading skills. The professional traders in Hong Kong believe in quality trade execution. They always suggest new traders work hard so that they can develop a balanced trading strategy. Things might sound little bit complex at the initial stage but if you focus on the long term goals, you can easily create a perfect trading system. Though there are many ways to trade the market today we are going to discuss a very different topic.

Majority of the retail traders don’t know the perfect way to use the indicators. They overload the chart with tons of indicators and make things overly complex. Just by learning to use the RSI indicator, you can ensure decent profit from this market. Let’s learn three powerful use of this indicator.

The overbought and oversold condition

Most of the time the professional traders uses the RSI indicators to find the overbought and oversold condition in currency pairs. You might have huge money in your trading account but still, you have to execute high-quality trades. Unless the market is in the oversold condition you should never execute long trade. Similarly, look for the overbought market to execute fresh short orders. So, how can we understand such condition by seeing the RSI reading? If the RSI reading stays near the 30 marks, look for buying opportunity. Similarly, if the RSI reading stays near the 70 marks, you need to look for short trade setups.

Filtering the trades

Majority of the rookie traders are executing trades in their trading account without filtering the false signals. Just by using the concept of an overbought and oversold condition, you can easily filter out the best possible trades in this market. You might think trading is all about finding the complex strategy but it’s not all true. You can rely on a simple trading system and make a decent profit from this market. If you get confused with your trading system, take help from the senior traders. The senior will give you a proper guideline about this market and you can easily make a profit. If possible learn multiple time frame analysis and see the readings of RSI indicator. If you the reading stays near the same region in the different time frame, you can execute the trade with low risk.

Trading the high impact news

The new traders use the RSI indicators to find the optimum condition to trade the major news. Never trade the high impact news when the RSI reading is on overbought or oversold condition. If the RSI reading stays near the 50 marks, you can expect to make some decent profit by trading the high impact news. But to trade the major news, you must have precise knowledge of technical and fundamental aspects of trading. Being a new trader, you should take advantage of the demo account and develop your trading skills. Never trade the major news unless you know the nature of this market. You might master the use of RSI indicator still you need to trade the market with managed risk. No one knows which trade will hit the potential stop loss. So always be prepared.


Trading with the RSI indicators and finding the best trade is an art. Unless you work hard and develop your trading skills like the professional traders, you can’t lead your dream life based on trading. Before you consider yourself a professional trader, ask yourself whether you know the details of this market. If the answer is NO, demo trade the market to develop your trading skills. Never take any risk unless you know what you are doing. Devote yourself to know this market much better or else you will blow up the trading account in no time.

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