How to create a profitable business strategy with an index of relative force (RSI)
Cryptoms in the world has had significant growth in recent years and came after effective commercial strategies. One of the popular tools that can help traders make deliberate decisions is the relative endurance index (RSI), a technical indicator developed by J. Weller Willer Jr.
In this article, we are going to create a profit trading strategy through RSI, covering its basics, benefits and proven implementation procedures.
What is the relative force index (RSI)?
RSI is an impulse indicator that measures the size of the recent price change to determine excessive or sales conditions. It is calculated as the ratio of stock prices for a certain period of time, thus sharing in the same period with average prices changes. The resulting value ranges from 0 to 100 and higher values indicate more extreme prices.
How does RSI work?
Here is an example of how the RSI indicator works:
- If the price of the shares has increased significantly (over 50), the RSI will be below 30 years, stating that the current price is sold.
- And vice versa, if the price of shares fell sharply (below 30), RSI exceeds 70, stateing that the current price is too excessive.
Business Strategy RSI
The creation of a cost -effective business strategy is related to the use of this indicator to identify potential purchasing and sale options. Here are step by step:
1
Identify the market : Select a cryptocurrency or asset you want to sell, such as Bitcoin (BTC), Ethereum (ETH) or Litecoin (LTC).
- To create a multi -term graph, create a graph : Use a technical analysis platform such as TradingView.
3
Draw an RSI indicator : Set the candle graph with two indicators: RSI and other index of your choice (such as MacD or Bollinger Band). RSI should be drawn on the same chart.
4
Determine excessive and exceeded levels : Use historical data for RSI to determine excess and sales level, such as 70-80 sales and 30-40 for surplus.
- Enter the purchase signal : When RSI passes above sales level (below 20), enter a long position active with the loss of stop below the selected level.
- Do trading : When RSI passes above excessive level, leave a long position and enter a short sales order at the same price.
Business Strategies RSI
Here are several popular business strategies that include an RSI indicator:
1
BOLLINGER BAND STRADDLE : Use Bollinger Bands to generate shopping and sales signals based on RSI values above 80 or below 20.
- Long trend with low RSI : Identify the long -term cryptocurrency trend, then use RSI to determine if it is too fried before entering the store (above 80).
3
short trend with high RSI : Use RSI to identify short trends in the cryptocurrency and then enter a short sales order when RSI is below 20.
Advantages of using RSI
1.
- Improved risk management : RSI helps to identify excessively fight and sell conditions, allowing traders to effectively determine the loss of interruption orders.
3
Increased accuracy : Using several RSI rates can increase successful trading opportunities.
Conclusion
The establishment of a profitable business strategy with RSI requires understanding how this indicator works and includes it in a common business plan. By following the activities described above and combining them with other technical analysis tools, you can develop a reliable business strategy that helps to make conscious decisions in the world of cryptom trade.