How to Actually Trade with RSI: The real Way (Including MACD and Stochastic)

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Website: https://prophetmarket.com/

The RSI indicator……………… how many videos are there on the internet covering this?
Yet It took me forever to implement this profitably.

You see most people teach that the RSI indicator is meant to give you Overbought and Oversold signals.

Therefore logic would imply, that when the indicator is oversold, below the 30 area that is, we would be looking to take an up trade in the near future.

And inversely when the indicator is overbought, over the 70 area, well that would be when we should look for a down move?

Correct?

Heck no, that hardly ever works. That is a very good way to start throwing your money away. I know this because I’ve done it.

What the RSI indicator actually is, is a trend indicator.

You see if the RSI is below the 50 level, that is indicative of a down trend.
Take a look at this… obviously the price on this symbol is going down. Note where the RSI level is, its below 50…….
That is until the trend changes here and now the RSI is above 50….. who knew right?

So, when the RSI is above 50, we would then have an uptrend.

Here you go, you can see here on this chart exactly what I’m talking about.
Notice how we have an uptrend, pay attention to how the RSI is above 50 this entire time

Now I’m not going to spend a ton of time on this, because it is very very simple. Just Look at your own charts and you will see this over and over again.

By now you have probably noticed that My RSI indicator looks different than yours…. I only have one line on mine at the 50 level.

This is exactly why you’ve never learned to trade this correctly. The default indicator comes with a line at the 70 level and a line at the 30 level….. there is no line at the 50 area on a standard RSI.

So what I would say to you is that you should draw one on yours!

And this is exactly the reason why so many people cant trade this correctly… the lines throw you off as to what Is actually important and you end up focusing on the 30 And 70 levels.

Now we cant trade the RSI by itself (well actually you can do whatever you want, but you’ll lose money), because it is only serving to show us the trend…. And it will only ever show us the trend on the current time frame that we are using. I use multiple timeframes but that’s beyond the scope of this video.

But if we add something like, say a Stochastic Slow indicator… now we can more accurately pinpoint overbought and oversold areas, while also being able to determine the current trend.

Lets take a look at this Chart of Amazon on the 60 minute timeframe from March of this past year 2020.

You see right here our stochastic indicator is showing an overbought area

At the very same time, the RSI indicator is above 50, this would imply a strengthening up trend and therefore we would not be interested in taking the trade down at this point

Alright, but wait a minute, right here at the close of this candle the RSI now has a value that is less than 50

So lets put this together mentally….. visibly the price looks to be going down

Add to that the fact that the Stochastic slow was most recently overbought, meaning that the next likely direction would be down.

Now we have our RSI (remember this is our “Trend Indicator now”) showing that the trend has now turned downward…..

Obviously at this point the Stochastic is not yet oversold, and the RSI isn’t either…

Now lets add the MACD to the exact trade just to add one more level of certainty.

Lets set the MACD to (8, 21, and 5) why? Because the standard MACD settings suck, use 8 21 5, trust me.

Here is the exact same trade setup…. Now you can see that the macd Is crossing down at the same time that we determined that we could enter the trade.

Ladies and gentlemen this is how you use multiple indicators at one time… and this will make your entries far more accurate.

Let do another trade example and this time, we will look at an up trade.
Here we are on Amazon on the 60 minute timeframe again, and this trade was right around the 1st of January 2020

The first thing that we can notice is that the RSI has been consistently above 50
That means that Amazon has been trending up for a while.
Now lets add the stochastic slow

It is pretty easy to see that the stochastic slow is over sold right around 12/31
This is an up trade all day folks

And where would we exit????

Well a good spot…. Hahah… I’m laughing at how simple this is… would be when the Stochastic is overbought and the RSI is also overbought… meaning above 70

So right about here… you cash out and take your money.

That is a one day 50 point move on Amazon…. Which if traded properly with options would be well over a 100% return.
Ok I know this video wasn’t very long, but I don’t feel the need to draw this out… none of this is super complicated so please don’t make it that way.
I hope this was helpful and I hope it earned me a push of the Subscribe and like buttons if you havn’t already done so.

Thank you for watching

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Bollinger bands are rapidly becoming my favorite indication. They are extremely simple to utilize, they are instinctive, and they inform you so much about the marketplace at just a look. However how do you use Bollinger bands to make cash? Let me reveal you 3 easy steps that work almost each time.

You may would like to know where you can get more guides about Forex trading. In truth, you can attempt to visiting the website of brokers. On these sites, you will generally be able to discover some totally free ebooks. These ebooks will supply you with all the fundamentals and techniques you will know. For example, you will require to discover some indicators such as the RSI and Bollinger Bands. If you can understand the significance of these indicators, you will be able to make cash.

Make the revenues in the big trends and find out to cut your losses rapidly the minute you see them. A downtrend downturn may bring you greater losses if you can not determine when to give up and get out.

And frustrating it is! In 2004 I opened my very first FOREX account with just a couple of hundred dollars in order to check out the waters a bit. I figured, “OK, how hard can this be? I’ll simply set my targets at three times the distance to my stops so I’ll have a 1:3 risk/reward ratio. Then, all I need to do to earn a profit is be right more than 25% of the time on my trades. Any dolt can do that, right?” Well this dolt obviously could not, since about a lots trades later on I believe I may have struck my target about two times Bollinger Bands Trader . Every other trade was stopped out. Amazing. What was taking place?

We have a lot of tools at our disposal to help us to recognize these trends. These consist of trend lines, moving averages, Bollinger Bands and more. We will be covering each of these in separate posts.

TRADING PERIOD FOR THIS METHOD: Always enjoy out for great trading opportunity in between 7:45 am NG time to 11:45 am for morning trading session, while 1.00 pm NG time to 3.45 pm is recommended for afternoon session.

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Charts like the candlestick, used with bollinger bands are the most common method to track cost motion with time. Going into the trading profession can be a hard journey for lots of individuals.

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