RSI Indicator Explained
Beginner Friendly – No Confusion
Introduction
RSI (Relative Strength Index) is one of the most popular trading indicators. Many beginners misuse RSI and lose money because they expect it to predict the market. In this lesson, you will learn how RSI actually works and how to use it correctly.
What Is RSI?
RSI is a momentum indicator that measures how fast price is moving. It shows whether the market is gaining strength or losing momentum.
RSI moves between 0 and 100 and helps traders identify potential overbought and oversold conditions.
How RSI Works
- RSI above 70 → market may be overbought
- RSI below 30 → market may be oversold
- Middle zone (40–60) → neutral momentum
Important: Overbought does NOT mean price must fall. Oversold does NOT mean price must rise.
Common Beginner Mistakes with RSI
- Selling immediately when RSI hits 70
- Buying immediately when RSI hits 30
- Using RSI alone without price structure
- Changing RSI settings after every loss
How Beginners Should Use RSI
- Use RSI as a confirmation tool, not a signal machine
- Combine RSI with support & resistance
- Look for RSI divergence near key levels
- Always manage risk
Best RSI Settings for Beginners
The default RSI setting (14) is enough for beginners. Avoid changing settings too often.
RSI Is NOT Magic
RSI does not predict the future. It only helps you understand market momentum. Use it calmly and consistently.
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