RSI indicator explained simply and understandably. // RSI tutorial, RSI trading strategy for stocks


RSI indicator explained simply and understandably. // RSI tutorial, RSI trading strategy for stocks, rsi indicator settings basics how to use relative strength index for dummies youtube david moadel welcome to looking at the markets with
David Modell today I want to give you an introduction to RSI so here we go
what is RSI well RSI is relative strength index it’s a technical
indicator for stocks or ETFs or commodities currencies etc it was
featured by J Wells Wilder in the 1978 book new concepts in technical trading
systems here is his formula for the RSI in case you’re curious thankfully you
don’t need to know it in order to use it so in case you’re curious about the math
behind RSI there is the formula RSI is an oscillator which is just a fancy way
of saying that it’s a line that goes up and then down then up and down and so on
it’s also a momentum indicator which means that it indicates the general
overall direction or trend of a stock or ETF or whatever so when the RSI is going
up that means that the stock price is trending upward when the RSI line is
going down that means that the stock price is generally trending downwards
it’s very often used as a overbought or oversold indicator meaning that it will
tell you when a stock is overbought like here and here and overbought means
expensive okay means it’s at a high price or when it’s oversold like here
and here and here and oversold is just a fancy way of saying that it’s relatively
cheap or it’s on sale or a bargain etc medium term or swing traders will often
use the RSI 14 for the 14 period RSI and you can see we have it right here
RSI 14 which calculates the RSI using the most recent 14 days on the daily
candlestick chart and all these charts are coming from stock charts calm
because I wanted to give them credit all right so this is an example of the 14
period RSI a popular strategy is to wait until the
RSI goes below 30 which is considered oversold or cheap so if this is the 30
line here that horizontal line here okay and you can see here the RSI line went
below 30 okay it actually went to about 20 or so so a popular strategy is to
wait until the RSI goes below 30 which is considered oversold or cheap then
wait until it comes back up above 30 so here it is and it came up back up out of
oversold territory back above 30 and then buy the stock so you can buy it
right here when it goes back up when it goes below 30 and then goes back up
above 30 a lot of people will buy here people who own the stock might wait
until the RSI goes above 70 and here’s the 70 line okay and you can see here
that the RSI line when it’s hard to see but it it went a little bit above 70
right here okay so people who already own the stock might wait until the RSI
goes above 70 which is considered overbought more expensive and then wait
until it goes back below 70 out of overbought territory and then they might
sell the stock okay so when above 70 a little bit and then went back down below
70 and they might sell it here if they already own the stock if they are into
shorting or short selling then they might even might possibly even short or
short sell the stock after it goes up above 70 and then back below 70 they
might sell or short sell it here all right so we’re going to use SLV
which is an ETF or exchange-traded fund representing the price of silver okay
and this is the daily candlestick chart each candlestick here represents one day
of price action and so we’ve put the RSI below the price below the candlesticks
okay and so as you can see if you had all right let’s say you had waited until
the RSI 14 period went below 30 into oversold territory and then popped back
above 30 out of oversold territory and if you had bought here you would have
bought right about here and if you had held on you would have enjoyed a pretty
good profit here pretty good run-up alright and if you’re into you know
selling or short selling using the RSI then you might have let’s say you
already already owned SLV and you wanted to know when to sell it you could have
waited until it went above 70 and then popped back down below 70 out of
overbought territory right about there which would be right about here
okay and so if you already owned SLV you might have decided to sell it here
because of the RSI indicator and that would have been a good decision because
pretty soon afterward it went down a lot and you might have even shorted it here
or short sold it and that would have worked out pretty well if you had taken
your profits around here the highest the RSI can go is 100 and the lowest it can
go is zero though it rarely goes that far and let’s take another look at SLV
as you can see you know if this is ten then zero would be you know way down
here and it doesn’t often go to zero and if this is 90 then 100 would be way up
here and it would have to be really overbought or expensive to go up to a
hundred and as we know it oscillate between 0 and 100 and more often between
30 and 70 or oversold and overbought you don’t have to use the 14 period RSI as
you can change the look-back period to any number for example you could use the
RSI 5 period to see the short-term trend and you will get overbought and oversold
signals more frequently for a longer duration trend you could use a bigger
number such as the RSI 30 and so you can adjust the the period there alright
I hope this is helpful this was just an introduction there’s much more to learn
about RSI and other indicators so please give this video a thumbs up on YouTube
leave comments and please subscribe to my youtube channel so you can receive
the latest updates on my financial educational videos and if you’d like to
contact me if you have questions or you want some help
putting together a trading plan or learning about the technical indicators
or anything we’ve talked about today you can email me at any time my name is
David Modell and my email address is David Modell at gmail.com thank you so
much for watching and listening and I’ll talk to you again soon thank you for watching please like
comment and subscribe and I’ll see you next time

100 thoughts on “RSI indicator explained simply and understandably. // RSI tutorial, RSI trading strategy for stocks”

  1. Great tutorial.. but I'm new to it.. just a question..   

    Why should I sell when bar goes below 70 RSI indicator.. why not when its at 75, 80, or even higher.. won't we get more profit there? Sorry if I missing something here.. thanks..

  2. I really liked you explanation, thank you! What is the difference between RSI(n) and RSI stochastic? Which one is more useful?

  3. Thank you David for this wealth of knowledge. I went through pile of garbage on YouTube and didn't understand a THING, untill I found your videos. Thanks again.

  4. i love how you have hotties in your "indicator" made simple videos – that means you intend to say "even a hottie could do it"…… ROTFLMFAO

  5. Great video and easy to understand. I have moved from trading stocks to crypto and was wondering if you have used any of your knowledge and skills to test that market?

  6. Very informative video. Thanks.
    Just want to ask if you want to use RSI in hourly chart. What it should be? Is it 14 or shorter period such as 5?

  7. thanks for this great tutorial. how would I handle overbought and oversold at different timeframes please? thanks

  8. Hello sir I am from India . your videos are awesome . sir can you please make these videos series in hindi. Hindi is our national language.

  9. very nice vdo like always dear David…..the best teacher…anyway have you made any vdo on fibonacci ..i was looking through all ..to check if not pl make one to explain in your best skills

  10. Liked your teaching in this video. First one I've watched. It's clear, basic but totally explained. Thank you, will be checking out more of them now.

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  12. Another stellar video. Explained in a easy 1.2.3, A.B.C kinda way. Thank you for your time and effort. Your videos make it feel as if I’m actually learning a small step and pushes me to keep going…… thanks again!

  13. You are one of the best resources on trading on youtube. So many videos are full of hot air or are confusing. You are information rich yet understandable.

  14. Hello David thanks very good explained about RSI – Can you explain RSI with MACD and also with candle stick.

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