InvestorQ : What is RSI indicator and how can intraday traders make the best of the RSI in their planning of trade positions?
Anu Biswas made post

What is RSI indicator and how can intraday traders make the best of the RSI in their planning of trade positions?

Answer
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Aashna Tripathi answered.
1 year ago


One of the very popular and incisive technical measures for intraday traders is the relative strength index (RSI). The RSI considers the gains and losses in the market and by plotting the relative strength chart over a period of time it gives important pointers towards the future direction of prices. The RSI is again evaluated within a range and when it hits a certain threshold it is supposed to be indicative of a turnaround in the market. That is useful for intraday traders to position themselves profitably. Normally, the RSI acceptable range is 70 on the upper side and 30 on the lower side. Intraday traders can safely initiate long positions closer to the RSI band of 30 and initiate sell positions closer to the upper RSI band of 70. It needs to be remembered that technical indicators are at the core of intraday trading because they capture direction and momentum of the market quite well. This enables traders to take convincing position on the long side and the short side. These indicators are useful for an intraday trader in the sense that they not only capture the momentum of the markets but also capture the critical pivot points where the stock turns around.