Friday, May 29, 2009

What is RSI in Forex? - How to Use the RSI Indicators

One of the most used indicators in forex trading is to as the RSI. New traders often do not know what the RSI even is, and so this article is written to give a basic understanding for those newbies who may most appreciate an explanation. Basically, the RSI is the Relative Strength Index." Again, it is one of the most used indicators in forex trading. It is best used together with other indicators to enter and exit trades (I use it along with knowing where the basic hourly and daily support and resistance points are.)

I am going to explain how to use RSI in the simplest of terms. Basically, when the RSI falls below 30, the currency pair is considered to be "oversold." When an oversold condition presents, the trader of course will use this information along with other indicators to assist with determining when to place a buy order on the oversold pair. On the other hand, when the RSI is above 70, this indicates an overbought market. In an overbought market, the trader will be looking for an entry point to place a sell order on the currency pair.

You can check the RSI by various time intervals on the charts (i.e. hourly, daily, weekly, 30 minutes, 15 minutes, etc.). Daily and weekly time frames seem to be the ones most traders will analyze and seem to give the most useful and reliable information.

The RSI in forex trading is a very simple indicator that can be used, along with other indicators and signals, to assist the forex trader in make higher probability trades.

Have you discovered the forex strategy or strategies that are BEST for you? Visit Ann Pevey's site to see a free video explaining using RSI in forex trading. You will also find information on forex strategies, worldwide forex news, free forex training videos and more - all about FOREX.

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