Title: Unlocking the RSI forces in cryptocurrency trading: a guide for beginners
Entry
Cryptocurrency trading has become more and more popular and competitive, and traders are constantly looking for new tools to gain advantage. One of the most effective tools used by cryptocurrency traders is the relative force indicator (RSI). In this article, we will delve into the world of RSI and provide a guide for beginners on how to use it to make better commercial decisions.
** What is a relative force indicator (RSI)?
The relative strength indicator (RSI) is a popular technical analysis tool that measures the strength or weakness of shares in stock prices. Developed by J. Welles Wilder in 1978, RSI calculates the size of recent price changes to determine the terms purchased and sold out.
** How does RSI work?
To calculate RSI, you need two basic values: 14-speed simple movable medium (SMA) and 50-speed SMA. The formula is as follows:
RSI = (100 – (100 – (b / s)) / (2 * b)
Where:
– B is the number of periods
– S is a smoothing factor, which ranges from 7 to 13, which determines the calculation period
Interpretation of RSI values
The healthy RSI value lies between 30 and 70. When the value drops below 30, it may indicate precious conditions, while values above 70 mean sold out conditions.
* Scared (above 80): The supply is probably withdrawn or correction.
* Oversold (below 20):
Stocks are probably due to reflection or reflection.
How to use RSI in cryptocurrency trading
Now, when we examined the basics of the RSI, let’s immerse ourselves in a way of using it in cryptocurrency trading:
- Entrance points: When you notice a potential purchase signal on the relief, use RSI to determine whether the price is exaggerated or sold out.
RSI (b/s) = 100 – (100 – (b/s))
When the value drops below 30 and stays above 70, it can be considered as a sold out. If you are a stubborn investor, this may indicate that the actions have reached the level of resistance and is to reflect.
- Stop-Loss: When entering long positions, use RSI to determine if Stop-Loss should be corrected based on a price campaign.
For example, if you notice the entry point for 10,000 with RSI (b/s) = 30, use it as a reference to stop-loss setting.
- Recognition of designs: When traders feel more comfortable using RSI in their trade strategy, they will start recognizing patterns and signal combinations that can lead to profitable transactions.
- Risk management: When entering short positions or sales in strong trends, RSI helps identify the potential risk, indicating the terms purchased.
For example, when RSI is above 70 and the price is popular, it can be a sign that the trend has become aggressive, a suggestion that the actions can repeat themselves.
Application
The relative force indicator (RSI) is a powerful tool for cryptocurrency traders who want to make better decisions. Understanding how RSI works and by applying its rules, you will be able to see potential buying or sales signals in real time, thanks to which your transactions are more informed and profitable.
However, it should be remembered that RSI is only one part of a comprehensive trade strategy. It is necessary to combine it with other technical analysis tools, market mood indicators and fundamental analysis techniques to create an effective trade plan.
additional tips
- Remember to limit the use of RSI: this measures only the last price changes, ignoring performance.
- Use many time frames for trend analysis and signal confirmation.
- Do not rely on RSI only for your commercial decisions; Connect it with other tools and techniques to get a more balanced approach.
Taking into account RSI as a valuable addition to a set of cryptocurrency trading tools, you will be on the right track to become a qualified trader. Happy trade!