What is the best setting for RSI indicator?

As mentioned before, the normal default settings for RSI is 14 on technical charts. But experts believe that the best timeframe for RSI actually lies between 2 to 6. Intermediate and expert day traders prefer the latter timeframe as they can decrease or increase the values according to their position.

How do you read an RSI strategy?

Here are a few important takeaways to remember for this tool:

1. The RSI is a momentum indicator.
2. RSI oscillates between 0 and 100 providing overbought and oversold signals.
3. Readings above 70 are considered bullish.
4. Readings below 30 are considered bearish.
5. John Hayden promotes two key levels of 33.33 and 66.66.

Is RSI a good strategy?

The relative strength index (RSI) is most commonly used to indicate temporarily overbought or oversold conditions in a market. For this reason, a trading strategy using the RSI works best when supplemented with other technical indicators to avoid entering a trade too early.

How do you use RSI indicator in forex?

Conclusion

1. Enter a trade when you get an RSI signal on the chart – overbought, oversold, or divergence. Enter in the direction of the signal.
2. Put a stop loss order beyond the top/bottom created at the moment of the reversal.
3. Stay in the trade until the RSI gives you an opposite signal.

How good is RSI indicator?

Since the indicator displays momentum, it can stay overbought or oversold for a long time when an asset has significant momentum in either direction. Therefore, the RSI is most useful in an oscillating market where the asset price is alternating between bullish and bearish movements.

How do you trade a 5 minute strategy?

Rules for a Long Trade Go long 10 pips above the 20-period EMA. For an aggressive trade, place a stop at the swing low on the 5-minute chart. For a conservative trade, place a stop 20 pips below the 20-period EMA. Sell half of the position at entry plus the amount risked; move the stop on the second half to breakeven.