RSI Trading Techniques IQ Option

Strategy trading IQ Option Best Indicator RSI

Trading community de facto applies RSI indicator to define levels of overbuying/overselling levels on market. Even without use of additional filters, indicator works good. Have a very look on applying RSI that all the more increase accuracy on the indicator.

Standard way to make use of RSI :

RSI signals

The very first few, traditional way – buying option right now when RSI exits the zone of overbuying/overselling.

• when the valuation on RSI line gets below overselling a higher level 30% usually, bears force weakens and which means, the exit relevant to an indicator with this zone is that the right chance to open position for raising ;

• when values get over overbuying a higher level 70% usually, one needs to take into consideration variants of entering on downturn.

Buying option is surely an operation strictly to become provided only by the instant when indicator exits overselling/overbuying zone.

RSI on minor timeframes

2nd way. When you trade turbo options or binaries with expiration time lower than 30minutes, 70 and 30 levels not always allow to execute accurate enterings. Period ought to decreased for indicator to find its extreme values more frequent. For timeframe lower than hour one may usel RSI equals 5 and 90 to 10 or possibly 95 to 5 levels.

Example of setting Rsi to 90/10 and 5 period :

3rd way. For additional approval you should pay attention on higher period so you can begin to see the global trend. Trading binary options opposing the tendancy is that the bad idea, thus signal direction on current timeframe and 1 above must match together.

That's how signal approve looks on 1 minute and 5 minute charts :

RSI on longer timeframe M5 approves signal on chart M1

Period and levels of RSI should match together on both charts.

4th way. There's scalping way of supershort deals. This trading method continues to be frequently applied by american traders. The feature on the strategy is large quantity of signals during a little length of time. The most goal usually is to absolutely minimize response time relevant to an indicator.

Settings :

• RSI period equals 2 bars ;

• Overbuying limits are set maximally possible – 99 for overbuying and 1 for overselling.

As usual, this strategy is applied on chart M1 or M5. Expiration time of binary option usually won't exceed 5 minutes.

RSI Divergence

5th way – seeking divergence on chart is a great technique of getting RSI signals. Divergence is really a dissimilarity between chart and indicator values, for instance as soon as the chart draws higher and indicator shows lower maximum.

The example of divergence – two maximums on chart are about the same level throughout the indicator chart the next maximum is much higher :

RSI Divergence

The thing to remember – it is important for you to trust exactly what indicator shows, when it grows – we buy option CALL, when it decreases – PUT.

The example of entering the order on the idea of RSI divergence :

entering the order on the idea of RSI divergence

RSI & Bollinger Bands

The past, 6th way – to combine RSI indicators and Bollinger Bands, because the very first few one shows impulsive movements and the next shows the most direction of market movement. Subsequently we're asked very precise signals on entering the order.

The rules of trading on RSI are fairly standard. Purchase PUT option by some time indicator line exits the overbought zone, or CALL option, when indicator line exits the oversold zone. But one should enter only in situations the worth is situated near to the there is no getting around it of Bollinger Bands, which should behave as a filter. Ideally, the worth should exactly overcross the line by the instant of receiving RSI signal.
Also learn:

• IQ Option technical analysis
• Stochostic trading strategy
• CCI trading strategy IQ Option

In situations of Сall signal, the worth of opening the breakout candlestick ought to above the line. The closing price above :

All the very same is true for PUT-signal, during this case the worth therewith should simultaneously cross the highest line of any channel – Opening price higher, closing price lower (inside channel) :

The expiration time may vary betting on used timeframe. Ideally, the expiration time ought to equivalent to number bars were required to achieve the floating average (average line on the channel) due to edges on the channel. One may calculate the normal number bars were required to pass the distance derived from one of edge to an alternative and divide it by 2.

Conclusion

One of the famous and widespread indicators can easily become the idea of profitable trading strategy if an individual uses it properly. We discussed several understand how to of increasing the percentage of succesul deals through the common RSI strategy. Attempt to use these methods on free practice account.

Traditional indicator became so merged into your trader’s lives, that a lot of just don’t consider them because the serious trading instrument. As well, the majority of more up-to-date developments are utilizing same RSI or floating averages. The key benefit of RSI is its versatility, this indicator might be taken on currency pairs, trade stocks or goods with equal success and without loss of quality.

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