Today I would like to talk about display Binary Options RSI. It belongs to the oscillators. Best of all it does not work during a pronounced trend, but on the contrary, when we see a sideways trend (in other words - flet).
This tool Technical Analysis Weider was designed by speculators. Force Index Indicator bought wildly popular among traders worldwide. Thanks to him, we can judge the strength of the movement of value of the asset, as well as see the overbought and oversold.
Like many indicators on a live chart RSI is displayed in the form of a curve that moves in the range of up to 0 100. When the indicator rises above 70, it is believed that he went into the overbought zone. If the indicator falls below 30, it is believed that he went into the oversold zone.
The indicator is very simple to use. The settings can be changed only period. And it is calculated as the ratio of positive to negative price fluctuations. If more positive oscillations, Strength Index indicator is growing. Conversely, if more negative oscillations, Strength Index indicator falls.
The signals of RSI:
- In terms of divergence, if the price increases, and the light began to fall, so we should expect a reversal. This is a signal to the option PUT. If the price falls and the light began to grow, so we should expect a reversal. This is a signal to the option CALL.
- If the curve of the indicator rose above $ 70, should wait for a turn and open the option PUT.
- If the curve of the indicator fell below 30, should wait for a turn and open the option CALL.
The indicator is very idle and effective, as long as there was a pronounced trend.
Advantages indicator Relative Strength Index:
- The indicator is very easy to learn, even for beginners, it will not take long to learn;
- It is more suitable for trading binary options, rather than Forex. In most cases, the signals are processed successfully;
- Perfect for short-term trading;
- This indicator, along with Stochastic Oscillator, is one of the few that are ideal for trading during side flats. While the lion's share of the rest of the technical tools was created for trading precisely by the trend;
- Works great in combination with other oscillators.
Disadvantages indicator Relative Strength Index:
- Signals on it are generated much less frequently than other technical tools. The same Stochastic gives signals much more often;
- Demonstrates poor performance at a time when a steady trend begins in the market;
- During high volatility indicator gives a lot of false signals.
As for the settings, the default period is set to 14. If you trade volatile currency pairs, this parameter can be increased. With low activity, I recommend reducing the period, as this will help to significantly reduce the number of false alarms.
By default, overbought / oversold levels are set to 70 and 30, respectively. Some pros prefer to increase it to 80 and 20 to filter out false signals to the maximum.