APPLYING RELATIVE STRENGTH INDEX TO TRADE FOREX - how is forex trading business

APPLYING RELATIVE STRENGTH INDEX TO TRADE FOREX ~ how is forex trading business

To begin forex trading, I actually had no idea what it was about so it was somehow weird how it is possible to make a cumbersome money trading online through a broker. As you already know by now, forex trading involves two aspects; thats the Fundamental and Technical Analysis. It took me about a month to get to really understand what the fundamental analysis was all about and what it entails. I am now working on the technical analysis and also developing my own trading strategies to start trading real account.

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Well today, I did enter into some few trades and a lot didnt turn up the way I wanted it to. As a newbie, I was just entering into the trade whenever I saw a bullish candle form without taking into consideration what might happen next. I will be talking about how I used the Relative Strength Indicator in my trade today.

When using the Relative Strength Indicator, you basically buy a currency pair when the RSI moves below the horizontal 30 reference line. Conversely, traders sell a currency pair when the RSI moves above the 70 reference line and back below it. The region above the 70 reference line is usually termed as the overbought region and the region below the 30 reference line is termed as the oversold region

In one of my trading today, I placed a sell order when the RSI crossed the 70 reference line(overbought) region but the price chart continued to go uptrend which triggered my stop loss profit. Some of you might be wondering why this happened. I got to realize later that, it is not always right for you to sell when the RSI reaches the overbought region and not always buy when RSI reaches the oversold regions. These are some of the common blunders newbies in forex trading commit in forex trading. 

In my next article, I will be talking about how to apply Bollinger Band indicator in forex trading and also about the implications of applying the Bollinger band in my trade. 

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