Tag Archives: FX trading

Forex Trading Basics – Relative Strength Index (RSI) Indicator

Introduction:

Many readers are used to me talking about Hodo Global and how you can make money trading currencies by utilizing them. However, I am now adding a series on basic trading tools for those who are also interested in learning to trade on their own. Most people who venture out on their own lose money. So, I would use a system like the RYZE.Ai artificial intelligence trading algorithm as a starting point while learning the skills necessary to consider trading. In this vein, I have started with a basic indicator, the rSI.

What is the Relative Strength Index (RSI)?

rsi-example

EURUSDM15 RSI Example

The Relative Strength Index is a technical momentum indicator. Today we will cover the basics of the Relative Strength Index to make you familiar with this type of indicator. The RSI is a momentum indicator and also an oscillator that indicates overbought or oversold conditions in the market. It is important that you understand the basics in order to begin to learn trading skills, if that is your goal..

The RSI compares the magnitude of recent price rises to recent price falls to try to determine overbought and oversold market conditions. When we say a market is overbought what do we mean? Basically this means that the price has risen usually accompanied by high volume to a point where an oscillator has reached its upper bound. The most common boundaries are set at 70/30 or 80/20 for the RSI. Depending upon the currency pair or whatever you are looking at, you can see what level works the best.

It is important to note that the RSI indicator and the others discussed in this series of articles does not only apply to Forex trading. These same concepts and indicators are used to trade stocks, stock indexes, futures, commodities, and options. This basic trading knowledge will serve you well whatever and wherever you trade.

RSI Formula:

RSI = 100 – (100/(1 + RS) where RS is the Relative Strength

RS = the Average of X periods of up closes (as compared to previous period) / the Average of X periods of down closes

Below, I have a chart of the hourly EURUSD currency pair with the RSI indicator applied. Again, I have not optimized it for this currency pair, I just used the default settings.

I have drawn lines in red to indicate points where you would sell and in blue to indicate buys. There are many nuances that can determine exact trade entries but this is a good basic example for you to understand the RSI oscillator concept.

Hourly EURUSD Chart with RSI:

RSI-Example

RSI Indicator


For those of you who would like to read more, I have found this to be a good book on the RSI and a few other common indicators:

Click here for more on this book.

Example using the Hourly EURUSD Chart

Trade Example:

What does this mean in terms of trading profit?

In Forex quotes usually a Pip is the 4th place to the right of the decimal point. If you are trading a mini lot a pip would be worth $1.

I have picked one trade from the chart above and it is shown in the chart below:

EURUSD RSI Indicator Trade Example:

rsi-trade-example

EURUSDH1 RSI Trade Example

This is an example to teach the basics. I did not delve into stop losses or risk. In an actual trade these factors have to be considered and it is possible we would not have held the entire time, but for a basic example of the RSI, this is fine.

Profit Potential:

In the trade above the entry looks to be around a price of 1.09510. When the next buy signal is generated and thus you would exit the sell, the price looks to be around 1.08070. Do the subtraction, 1.09510 – 1.08070 = 144. So, in this example the profit would be 144 pips. Making the assumption that we were trading a mini lot, a pip is worth $1. This would translate into a profit on the trade of $144.

This means if you had a standard account with a broker and had the minimum $2,000 for a standard account in about 20 hours or lets say a day you increased your account by $144. If you do the math, $144/$2,000 =.072 or 7.2%.

In one trade in one day a profit of 7.2% could have been realized. This is why people like to trade Forex. There are extraordinary opportunities. However, people need to be very careful as there are also risks. People who don’t know what they are doing and perhaps bought some “magic” trading system and watched a couple hours of videos (as I have seen advertised) and then are turned loose to trade are probably going to lose. You may have a few profitable trades first, but you are probably doomed to lose.

I recommend a different approach with extensive training and mentoring and an earn while you learn approach. Starting with having an account linked to RYZE.ai, the fully automated, hands free program that uses an artificial intelligence algorithm to trade using strategies not usually available to small traders. This is the earn while you learn part. Then study, study, study. Learn trade setups, risk management, trade entries and exits, stop losses and profit targets. You can eventually, when comfortable, trade in a practice and eventually open a small account and trade micro lots. This is a fantastic way to learn. You get to see what happens when trades go right and what to do when they don’t work out as planned. You are not going to risk a large account or trade larger lots. Learn, learn, learn all the wile RYZE.Ai is earning for you. You make decide to also trade on your own or you may decide to leave the trading to RYZE.Ai and focus on other endeavors.

Conclusion:

I hope this RSI introduction has been educational and informative. If you have any comments or questions, please leave them in the comments section below or you can email me at Xin@FXTradingIncome.com .

Are you ready to learn more about RYZE.Ai and Hodo Global? If so, click here.

Find out how you can make money with RYZE.Ai. Also feel free to drop me an email with your phone or Skype and we can discuss questions in person.

Learn About RYZE.Ai

Learn How to Profit with RYZE.Ai

Sincerely,

Xin

Zin Zhang - Hodo Global

Zin Zhang – Hodo Global

Xin’s Independent Trading for 4/27/2016 – I am Going to Buy a Dog and Name it Silver

Introduction:

silver-bullion

Silver Bullion (Or What I Wish My Basement Looked Like)

Not a lot of trades today, but they were all winners. I will take quality over quantity any day. Once again I had a Silver trade, hence the picture to my right. I have also included more silver history below. Also today, my son didn’t get up until 5:45 so I had some time to myself to work on training and get ready for the day.

I would like to have a few of these silver bars. One day I will have them if my trading continues like today.

If you are one of the people who read Xin’s Trading Adventures articles and would like to enjoy the profit potential of currency trading but personally don’t have the time or knowledge to trade currencies on your own, don’t despair there is a trading program for you! It’s called RYZE.AI from Hodo Global. I can show you a fully automated system powered by an artificial intelligence algorithm, that produces consistent profits, day after day. For more details, please watch the overview videos, read more of my  articles, attend a Thursday evening webinar or send me an email and set up a time to talk personally.

Signal: Euro / US Dollar (EURUSD) Harmonic Bat Pattern

I entered two positions in this trade early in the morning (no 11 year olds interfering this morning). I didn’t see until I got home this afternoon, but it hit both profit targets a little later in the morning. A really nice, quick trade.  great way to start the day.

EURUSDiM15-bat-4-27-2016-455am

Euro / US Dollar (EURUSD) Harmonic Bat Pattern on 15 Minute Chart on 4/27/2016 at 4:55 AM

Evening Tuesday 4/26/2016

Signal: Silver / US Dollar (XAGUSD)

Once again, I took two positions in this trade. In just minutes it hit both of my profit targets. I am so excited that my silver winning streak continues.

XAGUSDiM5-shark-4-27-2016-717pm

Silver / US Dollar (XAGUSD) Harmonic Shark Pattern on 5 Minute Chart on 4/27/2016 at 7:17 PM

Signal: Canadian Dollar / Japanese Yen (CADJPY) Harmonic Gartley Pattern

I was almost at profit target one when I took my two positions on this trade. I only had two positions so I put my profit targets at the second and third profit targets. It quickly hit both of these profit targets. This gave me two quick profits, not very big, but profits nonetheless.

CADJPYiM5-gartley-4-27-2016-718pm

Canadian Dollar / Japanese Yen (CADJPY) Harmonic Gartley Pattern on 5 Minute Chart on 4/27/2016 at 7:18 PM

Signal: US Dollar Japanese Yen (USDJPY) Harmonic Bat Pattern

I did not enter this trade. It hasn’t yet given a confirmation of the reversal. The price has continued upwards.

USDJPYiM15-deepBat-4-27-2016-718pm

US Dollar / Japanese Yen (USDJPY) Harmonic Bat Pattern on 15 Minute Chart on 4/27/2016 at 7:18 PM

Today’s Geography Lesson: Iwami Ginzan Silver Mine

From Wikipedia:

“The Iwami Ginzan (石見銀山?) was an underground silver mine in the city of Ōda, in Shimane Prefecture on the main island of Honshu, Japan. It was the largest silver mine in Japanese history. It was active for almost four hundred years, from its discovery in 1526 to its closing in 1923.

The mines, mining structures, and surrounding cultural landscape — listed as the “Iwami Ginzan Silver Mine and its Cultural Landscape” — became a UNESCO World Heritage Site in 2007.

The mine was discovered and developed in 1526 by Kamiya Jutei, a Japanese merchant. It reached its peak production in the early 1600s, with approximately 38 tons of silver a year which was then one third of the world’s production.

Silver from the mine was used widely for coins in Japan. It was contested fiercely by warlords until the Tokugawa Shogunate won control of it in 1600 as a result of the Battle of Sekigahara in 1600. It was later secured by fences and barricaded by pine trees. Yamabuki Castle was built in the center of the mining complex.”

800px-Iwami_Ginzan_Silver_Mine,_Shimizudani_Refinery_Ruins_001

Iwami Ginzan Silver Mine and its Cultural Landscape By Yama 1009 – Own work, CC BY-SA 3.0,

Iwami Ginzan Silver Mine

Lessons Learned

Lessons Learned 1: Trade Larger. Silver trading has been great for me the past few months. My winning percentage is really high. As a result, I am increasing the size of my first position a little. I will increase the first position by one increment. I feel comfortable that these are high probability trades and thus I am taking a little larger position.

Lessons Learned 2:  Short Trades can be Good. The trades on the shorter time horizons, such as the 5 minute or 15 minute chart can be excellent. The risks and profit potential can be smaller but they can be quick profits and really add to your profits quickly. Plus you tend to have many more of these signals than you do on the hourly, four hour or daily charts. Again, the risk and profits are smaller because the stop losses and profit targets are close but these can be good, fast, profitable trades that occur frequently.

Conclusion:

What a great day. Two quick profitable Forex trades and another profitable Silver trade. A good day, a happy day. Now I just have to buy a dog. 😉

Recommendation:

For people who are intrigued by the potential of the currency markets but don’t have the time or training to trade for yourself, don’t despair there is a system for you. I am talking about the RYZE.Ai trading service from Hodo Global. This system allows you to participate in trading strategies like high frequency trading that are out of the reach of individual traders. It is a fully automated artificial intelligence program that produces consistent profits. (Note: Past performance does not guarantee future returns.) are available in the videos below. If this interests you, click on the videos below, see my detailed posts, attend a Thursday webinar or email me at xin@fxtradingincome.com to set up a time to talk in person.

Learn About RYZE.Ai

Learn How to Profit with RYZE.Ai

Click here for the RYZE.Ai videos.

As I always say, if you have questions, comments or suggestions, please leave then below or feel free contact me.

Leave-Comments

Sincerely,

Xin

Zin Zhang - Hodo Global

Zin Zhang – Hodo Global