Beginner Guide to the RSI Indicator

The Relative Strength Index is arguably the most popular technical indicator when it comes to trading. But being popular doesn’t always make you right or easy. David Jones knows this and is here to give a helping hand to those just starting their journey in the world of the markets, as well as those who’ve had a bit more experience.

He goes over the way it’s calculated, its parameters and default settings and goes on to show it in real examples. There you can see it at peak performance but more importantly – when a bit more attention or caution is necessary to use it properly.

At Trading 212 we provide an execution only service. This video should not be construed as investment advice. Investments can fall and rise. Capital at risk. CFDs are higher risk because of leverage.

Comments

All In #1 says:

Can we use RSI chart on options?

Jishnu Roy says:

Can u pls tell me what is the strategy for 1min or 5min trade period prediction

jeremy anderson says:

the only setback is when the market makers oversell and overbuy the price intentionally…

Anish Gopinath says:

totally lost… so how to find the bullish/bearish divergence again.Both looks same from your example

magdiel matias says:

So I’m just beginning in my journey to becoming a trader and this video has been very helpful into understanding the RSI. Do you have any other videos on going into more detail about the RSI?

Md. Samsul Arifin says:

You have mentioned, the formula for RSI is:
RSI = 100 – 100 / (1 – RS)

But the right formula is:
RSI = 100 – 100 / (1 + RS).

https://www.investopedia.com/terms/r/rsi.asp

Vince ZH says:

The RSI calculation shown in this video is wrong. The denominator of the fraction is supposed to say: ( 1 + (Average of Upward Price Change / Average of Downward Price Change ) ), instead of minus. Otherwise the second term of the equation would become negative and would lead to an RSI above 100.

Crypto Observatory says:

That’s a plus not a minus

Dan Rickard says:

I saw this an hour too late. Made a trade at lunchtime using exponential moving averages and have been trying to figure out why the stock I bought has gone down instead of up. Using this RSI technique I have my answer. Shame I didn’t watch it this morning :(. Thank you though.

Binary Legend Trader says:

great video sir and please sir make a video on How to trade on news and how to Analysis before news for trading .

שני עופר says:

thanks! today i understood from another video that when the price is making a lower high and the rsi makes a higher high this is a bearish signal. does it make sense to anybody?

Alex Smith says:

Your RSI calculation is wrong…

P W says:

Great explanation! I’m into trading in indices, particulary the Dutch one. Could you give some advise on how to combine the RSI with the different signals of the Candle Chart? I.e. when the RSI indicates an oversold market (in a particular time frame), what kind of candle sticks are we looking for to confirm a buy? Is this a good combination to begin with? Thanks!

archosuserrx says:

For those doing the math, here’s the CORRECT formula: RSI= 100-[100/(RS+1)]
Using the formula in the video will yield an irrelevant value.

Kazem Nosrati says:

So for example, should you buy or sell at bullish divergence? By the way It was a very good video and well explainend for beginners like me.

Sergio Elizondo says:

im new to your channel, and wanted to know what indicators you recomend to use when investing on Crypocurrency?

The Floogiel Trading Co. says:

Great video… I use the RSI indicator as well and I love spotting a bearish divergence. These counter trend moves can be quick to the downside but profitable when you get in at the right time….

Caleb Jackson says:

close your eyes and imagine its Ricky Gervais

Steve Harris says:

I will need to watch again, but it makes sense. Thanks, I notice you are in the UK because you said maths, do you do any courses, sir?

Shary Ding says:

Your math is wrong. RSI=100-100/(1+RS), otherwise if RS is 2, then the number is greater than 100 which does not make sense.

Shivani Singh says:

Which software do you use for charting and analysis? Also, in the first formula, it should be 1+RSI

JAMTGP says:

Excellent series, thank you for sharing!!

shashank sarmah says:

Hi thanks for the video. Can you please make a video about the different time trading charts ( 5,10mins, 1 day and so on charts). What is the connection between them and when to use which time chart? Will be helpful for a new trader like myself! Many thanks in advance

carls apartments says:

great, thanks from Canada

Prophis says:

Great advice on divergence. Thanks for your input

Psaikodelik says:

Damn, I hate those saturday and sunday gaps. Why can’t your markets work on the weekend too? Today everything is software, and people trade on a computer, keeping the saturday and sunday closed is stupid at this point. Well, I don’t care anyway, do as you please…

Mohammed qutub uddin says:

Which broker house is good? Money deposit /withdraw easy

Ning Wong says:

Check out the RSI divergence on MSFT on the daily bar chart. I have mine set for default 14 days.

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