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Questions and StoriesCategory: QuestionsWhat Trade Indicator Do You Use?
Edward Duffy asked 2 months ago

What Trade Indicator Do You Use?

I am exploring the RSI Trading Indicator to give me some pointers as to when to enter trades. I have never used this indicator and I have not been much good at trading to date and I have found the LuckScout site to be good with the material that the team present. Is anyone using RSI as a trading strategy at present? Does this help to identify trades? Would you recommend it to your friends?

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19 Answers
LuckScout Staff answered 2 months ago

Thank you Edward 🙂

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Leno Jean Pierre answered 2 months ago

I’m using RSI and bollinger bands.

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Edgar Raven Malloy answered 2 months ago

From a mathematical point of view, RSI or Relative Strength Index evaluates the ratio between relative moving averages of rising and falling price moves by producing an output from 0 to 100, which makes it an oscillator. On a practical side, RSI is used to define markets as either overbought or oversold. If the value is above 70, market is considered to be overbought and likewise, if it’s below 30, market is considered to be oversold. This doesn’t mean one should take a trade every time the RSI goes beyond these values, because markets can be in overbought or oversold conditions for extended periods of time.

In spite of it, a lot of techniques exist for using RSI as a part of a trading method or strategy. One example is to spot bullish or bearish swing rejections. In the simplest of terms, bearish swing rejections occurs when RSI goes above 70, heads back below and then gets rejected in another try to pass the horizontal line of 70, implying a sell setup. Quite similarly, bullish swing rejection happens when RSI moves below 30, heads back up and then tries to go below 30 again, but it ends up rejected, implying a buy setup. Yet, these setups should not be used by themselves, as further confirmation from other signals is recommended.

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Since RSI is a momentum indicator, another technique and one I prefer more is spotting bullish or bearish divergences. Bullish divergence occurs in a downwards trend, when RSI starts rising while price keeps falling. Identically, the bearish one happens in an upwards trend, when RSI starts falling while price continues to rise. Divergence is considered to be a leading signal, because it warns traders of possible price trend reversal, unlike moving average crossovers, for example, that produce signals after the fact. Having that said, divergence is not a holy grail and while it can entail price turn, in reality that might not happen. Thus, like with rejection swings, divergences should be pursued in confluence with other tools from your arsenal. To illustrate, a bullish divergence at a strong historical support in the specified time frame, coupled with growing bullish volumes may represent a high probability trade. The same goes for bearish divergence at a strong resistance. Depending on preferences, Fibonacci levels or even dynamic support and resistance in the form of moving averages may be used.

In any case, trading is a high risk activity, so proper money management practices must be diligently utilized.

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Nnaemeka Victor answered 2 months ago

Bollinger Bands

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Edward Duffy answered 2 months ago

Thanks for the explanation Edgar, do you use RSI in your trading? Has the use of RSI been successful for you

Edgar Raven Malloy replied 2 months ago

Yes, I had used RSI and techniques described above in my strategies with success, but nowadays I’m more inclined to use Composite Index. CI is also an oscillator, but the difference is that it has momentum and simple moving average formulas integrated with the RSI. Thanks to this trick it can freely move out of the 0 to 100 normalized range and it tends to produce divergence signals when RSI fails to do so. By all means, this doesn’t say that every CI divergence signal is on spot, it rather implies there’s a greater probability, if price trend reversal actually happens, that before its occurrence, we would have been warned by the CI, rather than RSI.

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Kenneth Ogbonnaya answered 2 months ago

I use Bollinger bands and RSI indicator to trade.

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Gareth White answered 2 months ago

Bollinger bands and RSI indicator are certainly one way I trade as they seem to work pretty well together especially on the weekly//monthly TF’s

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Kenneth Ogbonnaya answered 2 months ago

I use Bollinger bands and RSI in my trading.

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Kenneth Ogbonnaya answered 2 months ago

I use Bollinger bands and RSI indicator to trade.

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Leno Jean Pierre answered 2 months ago

I understand more bollinger bands strategy and it seems to be very simple to use if you understand how it works. I’m trying it every day to master and become successful using it.

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Kenneth Ogbonnaya answered 2 months ago

I use Bollinger bands and RSI in my trading strategy. This 2 indicators have really made their mark in showing trade setups on time.

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Leno Jean Pierre answered 2 months ago

I have tried many indicators from, RSI, Alligator, Volumes, bollinger bands, Ziczac to MACD ,the most accurate that i have found is bollinger bands. When you follow the explanation on the luckscout.com you can make profit using it.

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Leno Jean Pierre answered 2 months ago

I have tried many indicators from, RSI, Alligator, Volumes, bollinger bands, Ziczac to MACD ,the most accurate that i have found is bollinger bands. When you follow the explanation on the luckscout.com you can make profit using it.

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Leno Jean Pierre answered 2 months ago

I have tried many indicators from RSI, Alligator, Volume, bollinger bands to MACD, the most efficient i have found is Bolliger bands combined with the RSI. If you use them properly you can make profit in forex trading.

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Ahmad Khasan answered 2 months ago

5 and 9-period simple moving average is the indicators that I found useful to me. I trade the crossing of 5 SMA into 9 SMA. If it crosses from below I buy, if it crosses from above I sell.
 
Consistently applying this method with discipline proved to be profitable for me. As long as I am discipline, I finish the day with a positive points in my keeping. On a rare occasion, I limit my loss. 
 
But, the essential part of this system is discipline.

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Edward Duffy answered 2 months ago

Thanks Ahmad, that is very useful. Is that the only criteria to entering trades? When the 5 SMA crosses the 9 SMA do you enter on the close of the daily candle? I would be interested to know as what I am doing is not working.
Discipline is a key point and this another reason I have asked my question above to test your system and then devise a trading plan for me.
Thanks

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Ahmad Khasan answered 2 months ago

Edward — Yes, that is the only criteria. I think that when I limit the “technical” criteria for entering trade, my feeling sometime can distinguish between a good opportunity and the bad one. May be most people would name it instinct. I trade it on a lower time frame, even the 5-minute chart, and yes i wait for the candle to close. 
 
Another important part of this is that I limit my daily take profit level to 15 pips and so with my stop loss. I would call it a day when either side got hit first. And this is the hardest part of the system, to stop trading when my position got closed (either win or loss). 
 
Yes, discipline is the key. Technically, most people will not be interested from this system and practice. Because it is either too simple or too boring. And also targeting 15 pips daily is very uninteresting. But the point is, by following a simple system, we can develop that feeling/sensitivity/instinct that will help us in detecting bad trades from the good one.
 
If we have this feeling/instinct developed, we can be more flexible in trading and aim for higher points.

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Edward Duffy answered 2 months ago

Thanks Ahmad, very helpful

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Kenneth Ogbonnaya answered 2 months ago

In my trading life ,I have been using different types of indicators until I come in contact with luckscout team, they taught me a different trading strategy that made me to master only Bollinger bands and RSI indicator.

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