What is the RSI Indicator?

The RSI Indicator is a type of indicator that allows the detection of mismatches, overbought and oversold situations by comparing the movements that occur on consecutive days. First published by mechanical engineer J. Welles Wilder in 1978, RSI can be classified as a momentum oscillator. Momentum, on the other hand, is the oscillator that shows the change of prices as a percentage in a certain time, as we mentioned in our previous article. In other words, it shows how much the stock has earned and lost in a certain period of time. On the other hand, RSI analyzes that there is no overtrading in any financial instrument. How is the RSI Indicator calculated and how is it interpreted? The RSI Indicator does not need to be calculated by the investor. The calculation of the indicators that can be monitored through the Meta Trader 4 or Meta Trader 5 platform is performed automatically by the platform. This calculation is made for 14 periods. There are some criteria for investor's interpretation of indicators. RSI Indicators can be used for two different purposes: detecting overbought and oversold points and detecting mismatches. 1. When interpreted for the purpose of determining overbought-oversold points;   In the indicator moving between 0 and 100, 30 and 70 price levels are determined as limits. An RSI below 30 indicates oversold, and over 70 indicates an overbought. The movement of the RSI Indicator at these extreme levels means that the trend in question will be short to medium term. Thanks to RSI, the purchasing power of instruments in the past days is calculated and the effect of today's demands is estimated. In other words, RSI is an important estimation tool to predict the situation of price meeting demand. 2.When interpreted to determine incompatibilities; The bottoms and hills that take place on successive days are compared. If the trend movement is upward, the newly formed lows and peaks are expected to form higher than the previous day; If the trend movement is downward, new lows and peaks are expected to form lower than the previous one. Any movement that occurs outside of this accepted norm is considered a disharmony. How to add RSI Indicator? The RSI Indicator, like all indicators used as a market forecasting tool, is easily accessible via Meta Trader 4 and Meta Trader 5. This platform, which is widely used by companies offering professional Forex services, helps you to have an idea for your investments with its easy interface. By downloading this application to your computer, tablet or phone, you can select the indicators on the left side of the screen and drag them to the main screen. You can interpret the automatically calculated indicators with the tips we offer you.