Trading with RSI

For Day trading
click on 1day chart
set rsi as 14,2min

short when rsi crosses 80 for the first time in the day.
if rsi comes down but price doesn't fall much, square off
otherwise, hold on till rsi falls till 40
then, if rsi goes up but price doesn't rise back, hold on till rsi falls till 20
otherwise, book profit
then, if rsi goes up but price doesn't rise back, hold on till rsi falls further
otherwise, book profit

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go long when rsi dips below 20 for the first time in the day.
if rsi goes up but price doesn't rise much, square off
otherwise, hold on till rsi rises till 60
then, if rsi goes down but price doesn't fall back, hold on till rsi rises till 80
otherwise, book profit.
then, if rsi goes down but price doesn't fall back, hold on till rsi rises further
otherwise, book profit

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For 1-3 month ride:-
click on 1yr chart
set rsi as 14,1d

For 2-5 day ride:-
click on 1month chart
set rsi as 14,30min

Short when rsi is "clearly overbought under the rally conditions"
Buy when rsi is "clearly oversold under the rally conditions"

It is advisable that we don't jump in the train of trade immediately after the rsi-whistle but board the train when it actually starts to move on the platform.

Often there is some gap or premature alarm between the rsi signal and big movement just like there is some gap between the train's whistle, 'down-signal', the guard's green flag and the actual movement of the train!

Rsi signal should alert us, but we should wait like a pro before entering.

Price generally has some life left before turning finally.

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Pl remember, in trending markets 70/30 is shifted to 40/80 or 20/60 (depending whether it is in uptrend or downtrend). Sometimes, even 5 and 95 levels can be seen.

More important than selecting the rsi boundary (70/80/90 or 30/20/10) is mastering the underline concept.

Once the reason behind the method is clear, u will not need to memorize rsi trigger levels, these will become IInd nature to you.

rsi trigger boundaries are not hard and fast, these keep changing as per the bull or bear or dull markets.

stock trading is a fine mix of science and art. practice and you will not need to be anxious about exact rsi level.

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Also, RSI and 34/8 SMA can be a deadly combination. Try it.

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