What Should Know Before Deciding Forex Investment?

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What Should Know Before Deciding Forex Investment? Empty What Should Know Before Deciding Forex Investment?

Post  KajolThappar on Wed Sep 29, 2010 12:31 pm

Most Forex traders would agree that currency trading can be very difficult at times and earning consistent winnings are hard to come by for most. As a result, I have attempted to provide an easy to follow but extremely useful Forex trading strategy. The Relative Strength indicator (RSI) is a very helpful tool in the Forex trader's arsenal. This oscillator is usually used on the basis of 14-day, 9-day and 25-days. Let's take a look at the best way to use the RSI and how this forex trading indicator can make you consistent winnings.

With regards to the Forex market, the Relative Strength Indicator shows the forex market activity in terms of if it is over bought or over sold. The RSI provides the Forex trader with an indication in terms of the direction the Forex market is moving. One of the great advantages of this indicator is that it is a leading indicator and as a result this indicator shows forex traders what the market is going to do, allowing traders to act accordingly.

It is important to remember that the greater the RSI number, the greater resulting over bought market there is. Of course the opposite is true: The smalle4 the RSI number, the more over sold it is.

So how does this really help us on the Forex market? It is an exceptional tool when looking for micro reversals as well as macro reversals in the Forex market.

Here is a really helpful tip: Try applying the Relative Strength Indicator on the one minute chart with an eighteen period. This should give you a real nice entry signal and you can also apply this to a five minute chart as well. remember that the most critical numbers as far as entry is concerned are twenty-five and seventy-five.

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