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Thread: Forex Indicator Trading - Trading with RSI and Stochastic Indicators

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    Default Forex Indicator Trading - Trading with RSI and Stochastic Indicators

    Technical indicators are data points that try to predict how the market will move in the future. While they are not always 100% accurate, technical indicators have proven to be rather reliable signals. In this article, we will briefly discuss the RSI and Stochastic indicators.

    Relative Strength Index (RSI)

    Without going into too much technical detail, the Relative Strength Index (RSI) compares the recent upward and downward price movements in the market. This comparison is expressed as a ratio and the result is normalized between a range from 0 to 100.

    When we see that the RSI line crosses above 70 points, the currency pair is considered to be over-bought. This means that the buying pressure has been too strong and that prices are likely to come down again soon.

    Conversely, when the RSI line crosses below 30 points, the currency pair is considered to be over-sold. This means that the selling pressure has been too strong and that prices are likely to go up again soon.

    For best results, the RSI indicator should be used as a trade exit signal, NOT a trade entry signal.

    Stochastic Oscillator

    Similar to the RSI, the Stochastic Oscillator is mostly used to indicate over-bought and over-sold market situations. Also, it is scaled from 0 to 100, just like the RSI.

    This indicator measures the ratio of closing prices with the recent market volatility.

    These buying and selling conditions for this indicator are expressed by two lines: %K and %D. The divergence between these lines and the market price action can be a reliable trading signal.
    by:blogger.2bull.com

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    Bullish soumyakhatri's Avatar
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    why do u paste it everywhere in the forum



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    i find stocastics more useful than RSI coz it tends to give signals more often and use ful for people who likes to trade many times a day. But when u have both rsi and stocastics pointing to the same direction, thats when u get really great trades.

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    seahawks90
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    Quote Originally Posted by earncommunity View Post
    i find stocastics more useful than RSI coz it tends to give signals more often and use ful for people who likes to trade many times a day. But when u have both rsi and stocastics pointing to the same direction, thats when u get really great trades.
    These
    two indicators are really very helpful and i must say that most of the traders knows their importance and they all know that how and when they have to use them but the newbies must have t get some knowledge about them because they are very helpful.

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    Market Maker cool user
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    These indicators are helpful and help us determine the history of the market and speculate the future. I take a look at RSI to determine the over brought or over sold conditions.

  6. #6
    seahawks90
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    Quote Originally Posted by ashvini View Post
    These indicators are helpful and help us determine the history of the market and speculate the future. I take a look at RSI to determine the over brought or over sold conditions.
    its totally true that these indicators are very helpful to generate profits in trading , I am using MCAD and i must say that its a good indicator. To make some reasonable profits everyday.

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