Using The RSI - How To Trade Penny Stocks
Breakdown Of The RSI Indicator
When learning how to trade with the RSI first you will need to know exactly what it does. This is an indicator that shows the current speed and change of the price movements. Most importantly it will tel you when a stock is oversold or overbought. The RSI has a level of measurement that goes from 10 to 90. When the reading on the relative strength index chart on a stock is above 70 that indicates that the stock is currently overbought. When a stock is overbought it would be wise if you are in a bull position to possibly expect that the chart may need to cool and the price may go back down to reset. When the rsi is below 30 this means that the stock is currently oversold. This may indicate that the stock will have a tendency to go back up.
The RSI is a very easy indicator to use and is one of the few that is used by almost every trader in the market when trading stocks. Use the rsi in conjunction with the other tools that we have provided training for and you will be a very successful trader. The rsi is used for bullish and short positions to time entry and exit points. I use the rsi to scan for stocks that are oversold. I personally feel that most of the time when the rsi is oversold unless it is being fueled by something very negative will indicate that the chart should adjust in the short to mid term.
Using a complete combination of the right tools will give you the power the forcast future moves on the chart. Think about it like flying a plane, without your tools you would be flying blind. Trading uses the same exact methodology. The right combination of tools used quickly without hesitation will significantly increase your trading profits. When used correctly the RSI indicator and like indicators such as the CCI and WM will give you a good idea of what is getting ready to occur. Think of the RSI as either positive or negative, meaning bullish or bearish and follow it in. Watch for quick changes in direction which will give you the indication that confidence may be slipping away. If you are trading penny stocks the window of opportunity to sell in some cases may come and go quicker than you can you would normally expect, so with that being said keep hesitation at a minimum. If you have any requests on other indicators such as the RSI please leave a comment below and we will cover it in a future video.
The rsi is one of the first indicators that most traders will learn how to use and for good reason. Traders for years have made big and easy profits by reading the rsi.
Practice Trading Using The RSI And These Other Trading Indicators
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