What is the RSI? A helper that saves us from being "stuck"

✨ For novice investors who have recently entered the stock market, you have heard the word "doi," preventing the highest price acquisition is easier than you think. And one of the key tools that helps is the Relative Strength Index. What is the RSI? And how does it help us make trading decisions? Let's see.

1.What is RSI? What can it tell us?

The RSI or Relative Strength Index is a momentum index that measures the strength of buying / selling over a period of time, usually 14 days. By the RSI, it shows a number from 0 to 100. The simple principle is that whenever a high RSI approaches or exceeds 70 or more, it is a sign that the market is overbought and indirectly says that the property is rising too fast and too strong, there is a high chance of reversal. At the same time, if a low RSI approaches or falls below 30, it is a sign. The Oversold means that the property is coming down too fast and too strong.

2. How does RSI help "survive"?

RSI plays an important role in helping novice investors avoid acquiring at the highest price and then returning prices down (doi stick), acting as a brake on our greed, that it should not now be absolutely

✅ RSI is an acquisition alarm.

When the stock runs so strong that the RSI hits 70, this is a clear alarm: "This property is getting too expensive."

Save Doi: Despite the continued price rise, the RSI has already told you that the market is in a state of excessive purchase. Acquisitions at this pace are very risky to be the highest price (peak doi), waiting first is therefore the safest.

✅ RSI is rhythmic in considering acquisition.

When the RSI hits or falls below 30, this is a sign that the stock has been poured so severely that it has entered a "too cheap" state.

Better rhythm: This may be the rhythm that disciplined investors start to consider, gradually accumulate, because prices are in a zone with a high chance of rebound.

3. Restrictions to know of RSI values

To reiterate, looking at RSI alone is not a measure or guarantee of what the price is going to look like or which direction it is going to be, or which will always win the market. RSI is only a tool to help us make better decisions and better investment pace. It is most important to use other components and perspectives in combination.

What tool do I use with RSI?

The answer is a lot, like Trends. RSI should be used to see the pace of buy / sell. According to the main trend direction, if a stock is on an uptrend, an RSI of 70 may not always mean overselling.

Volume. If the price of the signal is reversed, such as a low RSI, but no Volume is coming in, it may mean that there is no serious purchase. Wait.

Fundamental, if the RSI is low (Oversold), but the company has earnings, financial problems, or bad news. Acquisition because the RSI is low alone can cause losses.

In a nutshell, RSI is still a great measure of market mood, but let us use it as just "part." Studying more knowledge and more tools will help make our decisions more disciplined and better.

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