Have you been trading Forex with poor results? Maybe you have tried using auto trading systems, EAs or other types of trading tools like trend lines, chart patterns, Elliott Wave, Fibonacci, even moving averages and price action but nothing seems to work. Many traders make the common mistake of going to the “Home Depot of Forex” and learning how all the tools work, but never learning how to use the tools to trade successfully.
I made that mistake early in my trading career spending over $5,000 dollars to essentially learn the basics of Forex. When I finished, I still didn’t know how to operate. Finally, after a lot of soul searching and thinking about what really mattered in Forex, I started to build a system based on those factors. Where I started was with a momentum oscillator called RSI, the Relative Strength Index.
RSI is perhaps the most widely used indicator by traders around the world to determine if the price is overbought or oversold. Ironically, overbought and oversold cannot be measured with an indicator. Even more ironically, the divergences that are also touted as important trading signals for the RSI are wrong. Divergences do not create reversal points, they signal retracement points with the exception of one situation, when the RSI is in a positive range and momentum takes it into a negative RSI range.
Once a trader knows those two things about RSI, the doors will be open to seeing trading for what it is. There are 5 things that make RSI trading a standalone trading system. If he knows these things, he will make money on Forex. They understand and spot signs of positive and negative reversals, they understand the RSI range, they understand RSI range changes, they understand momentum types 1, 2 and 3, and they understand trading target prediction levels. When you combine this with statistical data on when the push is most likely to occur, you create a circumstance where successful trading becomes a high probability event.
There is a lot to learn about RSI and the power it has to signal trades.
