RSI indicator trading strategy, Part 1

RSI indicator trading strategy for Forex, stocks and E-minis.

The RSI indicator and other "bounded indicators" are often mistakenly traded as buy signals when they're oversold and as sell signals when they're overbought. This is exactly the opposite of what works!

Enjoy the video! Leave your questions and comments below!

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Barry Burns
Top Dog Trading

Get the Free Trade Strategy: “The Rubber Band Trade”:

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Watch the related video: "Forex Trading Strategies: Enter When Time and Price Come Together:"
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RISK DISCLAIMER:
The information contained on this video is for informational and educational purposes only. We are not registered as a securities broker-dealer or as investment advisers, either with the U.S. Securities and Exchange Commission or with any state securities regulatory authority. We are neither licensed nor qualified to provide investment advice. Trading and investing involves substantial risk. Financial loss, even above the amount invested, is possible. Seek the services of a competent professional person before investing or trading with money.
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HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN INHERENT LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADES HAVE NOT ACTUALLY BEEN EXECUTED, THE RESULTS MAY HAVE UNDER- OR OVER-COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES SIMILAR TO THOSE SHOWN.

[baruchdorfman]

Nice setup TodDog, Forex trading is very volatile and by just having a good setup or indicator does not determine a trade will be profitable, instead profitable trades mainly depends on the experience of the trader. That is why i actually just allow an experience trade manager to handles most of my stock/forex investments on my behalf.

[budthatsmyrealname]

6:15 "you could have shorted this whole down side and made some real money" if it were only that simple to put your money back in May when your screen is in Sep. Its called Hindsight my friend. When we look back we always say "we should have..."

[ayushjohri]

Barry has pointed it right. RSI is relative strength indicator which shows strength towards bearish and bullish market. People often misunderstand it with oversold and overbought.
The idea is to follow the trend and when its downward trend below EMA prefer not to enter in oversold area.
Divergence is covered in a nice way.
keep posting Barry.. good job :)

[billyboy]

The best sit at home challenge would be creating wealth even while at home, I encourage you all to research, read books, learn about passive income and investments in the financial markets.

[kpcassell]

Very honest videos. I've watched a LOT of videos about trading and yours seem to be free of the garbage offered by others. Very interesting and reassuring to see. Thank you.

[techgeek]

Good video. Most traders think slapping few indicators with popular setting will bring them 100% winners. Mostly two types of indicators, give either early smoke or late signal. Both are bad. To confirm, you got to learn, price action trading, which will build your foundation solid and you make killer and precise entries. There is no shortcut. Learn and make money.

[captainshivers]

Bloomin great - ive been strugling with this for years on and off. Which ever way the Main Trend goes - Only take Enter on signals from the opposite half of the RSI! Cheers!

[DavidJDiehl]

RSI works very well in volitial ranging markets like the GBP/JPY pair. I use it on daily charts to great effect. Just buy on oversold and sell on overbout signals. Go back test it if you don't believe me. 14 period RSI, close, Wilders. 30, 70.

[vincecampillo]

Barry has explained the proper use of the RSI and I agree with his approach. Maybe he has suggested this before, I don't know because I'm new to his video's and a strong supporter of Indicators, but I never rely on just one Indicator. I utilize other Indicators in conjunction with the RSI, specifically Williams Percent and the ADX. W% works in reverse, meaning -100 is bottom, or what I call "the cellar", and -10 to -01 "the penthouse". So if the RSI is under 30 and begins to make a move upward, I then look to W% to see if it is rising out of the cellar which would be exiting the -90's, entering the -80's and holding ground . If the commodity can sustain this level, more than likely it will head upward. If not, and re-enters "the cellar", then I know not to enter the trade until it shows me some staying power or momentum. Also, the ADX shows the strength of the trend by raising day after day. When its value falters, and drops below the previous day, then the Trend is weakening, and the likely hood that it will turn and fall is in play. You want to give it some time to establish a full blown Trend change before you make a move. When all three Indicators are on the same page, you have the potential of profitable trade in the making. You also will want to use other Indicators to support your move.

[sra]

Trade with the trend. Don’t be bullish if the trend is bearish. Great video! You were right about how the word oversold makes you want to get in.

[SirSnowman]

please hide your Advertisement on the bottom left, we can't see something at 5:46

[openmindnewworld]

I believe the over sold trend is above the 70 mark typically you want to buy in when the trend line is down around 30 or below. But, not just that there are a lot of other variables to equate before you make a buy. Just my opinion though.

[Hustler]

So to confirm my understanding, what he's saying is that the RSI lines shouldn't be taken as seriously as many typically do because although the current price may go beyond those upper and lower lines and tend to indicate it going back in the opposite direction, we shouldn't ignore the overall trend of the line over a longer period of time because that is where the bigger profits can be made? Thanks

[waltermorris]

BARRY you have changed my mind regarding OS or OB levels in RSI or Stoc....However, the OS or OB signals work quite well in wide trading range mkts. But in 45 degree trending mkts, your explanation is spot on. BTW 45 degree mkts are the strongest trends which can last a long time cause they never quickly burn themselves out such as parabolic mkts. Typically, they take one bar or two bar pull backs, taking a slight rest, preparing for the next leg up or down.

[NareshSen]

Thank you, Mr. Barry-- never thought and learned anything about RSI in the way you have presented.

[Bukhos]

this was just an antidote to all the other videos I've been Barry

[runruntv]

This is the best YouTube channel I ever seen..thank's for dedicated your knowledge to help beginner trader like me..

[ahmedam]

I used to hate it because of how most people use it, but I love this explanation you have done, as it gives me a better perspective

[andrechristianto]

This is one of the MOST FAVORITE video for me. It just amazingly packaged, amazingly delivered, and amazingly enlightening. Thx a lot

[richardf]

I have recently started trying to learn trading and I find your videos very helpful. you explain things that a lot of people leave out. it is good to low the "how and more importantly the "why." Keep those videos coming.