Rsi trading indicator pdf

Analyzing gold divergence between the RSI indicator and gold price can help gold traders in identifying potential gold trend reversal points. These types of RSI gold divergence signals are often indicators of a gold trend reversal.

The RSI technical indicator can be used to identify overbought and oversold levels in gold price movements. Gold trades can be generated when the RSI gold indicator crosses these overbought and oversold levels.

When the RSI gold technical indicator crosses above 30 level a buy gold trading signal is given. Alternatively, when the RSI gold technical indicator crosses below 70 level a sell gold trading signal is given. Technical Analysis in Forex indicator regarding to the amount of profit generated, using hourly Technical analysis TA or charting that usually include price and data of market stretch from January to December Virtual volumes by utilizing historical data created by market reaches at Historical Trading Software VHTS is developed for the purpose of future currency price movements[5].

Although TA in general has computing the indicator based on its original formulas and been used for more than hundred years, the field had received scant interpretations; for applying the assumptions; for trading based on attention until recently by academicians who had been more focused buy and sell signals generated by the RSI indicator.

The quantitative- based Indicator analysis tries to make indicators such as MACD and P-SAR while the qualitative-based analysis depends on clarification of the shape of geometric patterns like levels of support and resistance and double 1.

Introduction bottoms[7]. Successful TA is constructed on three basic principles Trading in foreign currencies began in following the collapse of [1]: the Bretton Woods agreement under which gold held by central banks underpinned currency values.

Forex is a free market in which currency prices are based on supply of and demand for a particular currency [1]. Profitability The Forex market has several distinct advantages over other financial Many studies show that TA provides valuable financial signals [8] markets, such as: operation on a hour basis 5 days a week, no and recent empirical studies also provide increasing support for TA.

Besides, Forex In addition, the subsequent researchers concur with this actuality; market currently generates a daily volume of over USD 3. Ding et al. Moreover, Papadamou and Tsopoglou, indicated that TA 1.

In during on 8 years underlying factors is fundamental analysis FA. RSI in predicting trends than FA [20]. Easy interpretation makes Relative Strength Index RSI helps traders determine the power of all downward movement in opposition to the power of all upward movement in a specific 2. Indicators period. The formula for calculating RSI is given in Equation 3. TO forecasting future price changes can use from the value of result. They are used to provide clearer and If the difference between each closing price with its previous extra information about market to be used by investors to make better closing price is a negative value it is called loss and if it is decisions.

Indicators based on their functions are sorted to four positive it is called gain. In other word, RS is calculated in two groups; trend indicators, volume strength indicators, volatility steps; for first value of RS which is at the beginning point of indicators and momentum indicators as follow [5]. Generally, it is calculated with a day simple moving average and the formulas are given in Equations 3. Trend Indicators Equation 3. The second, and subsequent, computations are based on the previous averages and the present gain and loss as it is clear from the Equation 3.

Equation 3. Volume is the basic data to compute these indicators. Their hints for buyers and sellers are coincident or There are three points of values which play a critical role in leading the market. There are some Volume Indicators for example: finding the signals as shown in Figure 3. In this study, whenever the value of RSI in the first period is less than 30 or 50 and it is 2. Volatility Indicators more than 30 or 50 in the second period, there is a buy signal in There is a common term for explaining the size or magnitude of tick- the third period.

For sell signal, whenever the value of RSI in to-tick price oscillation independent of their trend direction called the first hour is more than 50 or 70 and is less than 50 or 70 in Volatility. By and large, variations in volatility tend to direct the second period, there is a sell signal in the third hour.

Momentum Indicators Momentum is a general term used to illustrate the rapidity at which rates move over a particular time period. Momentum indicators specify the weakness or strength of a trend as it grows over time.

Momentum indicators provide clear signals for market participants. Figure 3. Function of Indicators Thus, there are many indicators in market with different formula and usage. The main function of them is giving signal to enter; open the buy or sell orders, and exit; close the opened orders from market.

Since, finding the optimum point of price to buy or sell is the main concern of traders, indicators are trying to solve this problem and they are used to find the best point of price for buying or selling.

RSI advantages and Properties The data from this online data base are exported into the spreadsheets including over 60, rows for each currency; frequency is hourly RSI is a very good indicator to refer for confirmation for any entry in period An example of the data on MetaTrader software any simple or complex trading system. For current trading method it is shown in Figure 3.

After compiling the data, they are analyzed and advices well on entries, but opportunities occur not that often. The processed. It covers the first research question: what are the volume RSI has the advantage of being a very elegant indicator, in that it's and open, high, low and close prices for each currency in hourly movements are smooth, and it can fit into a neat package between 0 basis for the years It has the added advantage of being used by many traders out there, which is not only a testament to its abilities, but it also makes its signals self-fulfilling at times.

When used to indicate divergences, it can be quite powerful. Scope of the Study The data used in this study are real and worldwide some which are selected within the scope of this study; trading on hourly basis and for 10 years starting from January until December The hourly data for ten years makes it huge with more transaction to have reliable results.

This study is conducted to evaluate the one main indicator for predicting the market in order to buy or sell on the right time to gain profit and avoid lose. Period of the study is ten years starting from MetaTrader is one of the key tools for this study.

It is Forex trading January To provide facility for currencies evaluated separately. It means for each currency, indicator traders, MetaTrader generates the graphs and charts of the indicator applied and evaluated separately; so there are one indicator and four based on live and historical data. Thus, there are four virtual traders that each one working just Microsoft Excel software. Since the data are wide and calculations with the indicator and currency.

Moreover, to cover the lack of Microsoft Excel formulas and to increase accuracy of calculations, 5. This chapter will outline the VHTS is developed for application of assumptions in order to create research design for this project and the way in which the research a virtual circumstance for investors to trade like real trading on was accomplished.

The methodology as presented in Figure 2 has historical data considering the assumptions. VHTS has ability to been adopted in order to meet the objectives of this study. Besides, it can open and close sell and buy orders based low, closing prices and trade volume for four currencies within 24 on assumptions and signals created by indicator. Finally, it can hours a day of weekdays from January to December The data are obtained from online data base of Foreign Empirical method has been applied for evaluating the profitability of Exchange Market on MetaTrader software.

After collecting historical data from Meta Trader software the data are assessed to make sure they are the required data. The assessed data are used to calculate indicator. This indicator is calculated in VHTS with its unique formula which is explained and default assumptions suggested by its inventor. To prevent any error and mistake in VHTS, all formulas and assumptions have been rechecked and the software has been run several times to make sure that the results are correct and reliable.

It covers the second research question: what are the hourly values of the selected indicators for each currency. Although the results are different for each currency, it should be considered that the conditions of all currencies for using RSI are the same; trading with the same assumptions and interpretations.

Table 1 demonstrates results of implementing RSI for four different pair-currencies which are shown in four separate columns. First three rows are showing produced profit that is split to two parts, sell and buy profit. The same thing is displayed for loss in second three rows. Fourth three rows are showing the number of sell and buy transactions and total number of transactions for each pair- currency.

Finally, the last three rows are displaying ending balance, last trading date and paid commission to broker. With the employment of these assumptions, each trader will be isolated from everything that can deflect the results. Process capital management and risk management to make the result Results and discussion is presented according to the research comparable and unified.

After that, the trading software difficult to process them and out of scope of this study. These currencies virtual traders. Total numbers of open. It reduces the Index RSI indicator during ten years is presented in risk of losing big amount and of course makes the profits small Figure 4.

This assumption is to reduce lack of capital risk when the fluctuation and volatility are high. It means trading with RSI results loss related interpretations for the years to more than benefit and it caused reducing capital while the time is passing. Moreover, the final loss generated by buy orders is pips which is resulted from pips profit and pips loss while the final loss created by sell orders is pips which is resulted from pips profit and pips loss.

At the end of the day, there are pips loss generated by sell and buy transactions from pips profit and pips loss. The more detail results of using this indicator for EURUSD is given in Table 2 and as it is clear from the Table, pips loss created within first seven years.

It Relative Strength Index RSI indicator during ten years means when buy orders resulted in less loss or even profit, the sell is presented in Figure 6.