RSI is the Relative Strength Indicator which you can find in your quote charting package. Most traders use the 14 period RSI to trade. Our studies have shown that there is little to no edge going out that far. But, when you shorten the RSI to a 2-period or a 3-period, you start seeing results which begin looking like the holy grail.
Read “Why RSI May Be One of the Best Short-Term Indicators” to learn more.
If you would like to see a few of these studies, including one which has correctly predicted the short-term direction of the S&P 500 better than 83% of the time since 1995, go to tradingmarkets.com. We’ll send the report to you.
If you find these TradingMarkets Rules worthwhile, then take the next step and learn more information about our Swing Trading College. The Swing Trading College is one of the most popular courses we have offered and a variety of traders – from real-world professional money managers to end-of-day part-timers – have taken advantage of our 14-week course to give their short term trading the extra tools – or major overhaul – they need in order to profit in volatile markets. To learn about the Swing Trading College in greater detail, Click Here.
You can also read the next installment in our series: Rule #9 – Use the ADX to Time and Trade Trending Markets, by clicking here.
David Penn is Editor in Chief at TradingMarkets.com.