Name: RSI power unlocking by trading cryptocurrency: beginner guide
Introduction
Cryptocurrency trade has become increasingly popular and competitive as merchants are constantly looking for new tools to gain an advantage. One of the most effective tools used by cryptocurrency traders is the relative strength index (RSI). In this article, we will delve into the RSI world and provide beginner guide on how to use it to make better trading decisions.
What is the relative strength index (RSI)?
The relative strength index (RSI) is a popular technical analysis measure that measures the strength or weakness of the action price action. 1978 Created by J. Welles Wilder, RSI calculates the size of the latest price changes to determine the overcrowded and resale conditions.
How does RSI work?
To calculate the RSI, you need two primary values: 14 periods of a simple sliding average (SMA) and 50 periods SMA. The formula is as follows:
RSI = (100 – (100 – B / S)) / (2 * b)
Where:
– B is the number of periods
– S is a leveling factor ranging from 7 to 13, which determines the calculation period
RSI Values ​​Interpretation
The healthy RSI value is 30 to 70. When the value decreases below 30, it can mean too much, and the value exceeding 70 means resold conditions.
* Overbook (above 80): Stock in stock is likely to be associated with retreat or repair.
* resold (below 20): Storage is likely to be associated with bounce or resonance.
How to use RSI Trading Cryptocurrency
Now that we have explored RSI bases, we dive into how to use it in cryptocurrency trading:
1
RSI (b/s) = 100 – (100 – (b/s))
When the value falls below 30 and remains more than 70, it can be considered a resold condition. If you are a Bullish investor, it may mean that the shares have reached their level of resistance and have to bounce.
2.
For example, if you notice an input point of 10,000 with RSI (b/s) = 30, use it as a link to determine the loss of your stop.
3.
- Risk Management: In short positions or selling strong trends, RSI will help you determine the potential risk with excessive conditions.
For example, when RSI is greater than 70 and the price decreases up, it may be a sign that the trend has become too aggressive, which indicates that shares can retreat.
Conclusion
The relative strength index (RSI) is a powerful tool for cryptocurrency traders who want to make better decisions. Realizing how the RSI works and applied your principles, you will be able to notice potential purchase or sale signals in real time, making your transactions more informed and profitable.
However, remember that RSI is only one part of a comprehensive trading strategy. In order to create an effective trading plan, it is necessary to combine it with other technical analysis tools, market mood indicators and basic analysis methods.
Additional tips
- Remember RSI restrictions: this only measures the latest changes in price, despite previous results.
- Use multiple spaces to analyze trends and confirm signals.
- Don’t rely solely on your trade solutions for RSI; Combine it with other means and methods to make the attitude more balanced.
By supporting RSI as a valuable addition to your cryptocurrency trading tool kit, you will be good at becoming a qualified merchant. Happy Trade!