My
Trading Views
(Winning
Strategy – RSI)
Hello
everyone, here I am going to narrate about my all-time favorite trading
Indicator.
For
the past few years when I started doing the stock trading seriously I spent
much time on reading the articles like How to win stock market?, How to use the
indicators properly and effectively etc.
In
fact I paid much time to learn about the stock market tools.
And
I found the tool named Relative Strength Index (RSI). It is the most accurate
and proven indicator.
It
should be combined with any other leading Indicators like Super trend, VWAP
etc. depending upon which type of trading you practice.
But
you can use RSI for long term positional trading, Short term investment or
swing trading and it is beneficial even for the day trading.
Here
I can share a few viewpoints about my experience with you how to use the RSI.
RSI
value is 0 to 100, there are two lines that we can set, one is at 80 on the
upper side and other is at 20 on the bottom side.
Everybody
believing by mistake, if the RSI is above 80 it is a sell signal and it is the
right time to sell.
The
above statement is absolutely wrong in my experience.
And
most of the people understand that if the RSI goes below 20 we should buy the
stock – No it’s wrong.
I
found the strategy just opposite to the above statement.
We
should start watching the scrip closely when the RSI crosses above 50 mark and
we should buy the stock when it crosses above 70 and we can hold the stock when
RSI is travelling through above 70line. It may go to 80 or 90 or even it may
touch the 100.
We
should get ready to sell the stock when RSI starts falling down and when it
crosses below 70line during its downward journey.
To
fix the exact selling point we can combine this with any other tools like Stochastic
RSI, Super trend or VWAP.
This
strategy you can apply for short selling too.
We
can short sell the stock when it fall below RSI 20 line and we can place a
covering order when it cross the 20 line during its upward journey from the
lowest point.
RSI
is very simple and most important when compared to any other indicators for day
trading, swing trading as well as positional trading.
We
should practice how to use it wisely.
You
can do few days paper trading and see how it works for you.
Here
is the usual disclaimer; I am just sharing my knowledge with you which I found
effective in my stock trading. It may not work for you. This newsletter for
educational purpose only, it’s not the recommendation for you.
Best
of luck
Thank
you
