Relative Strength Index

The Relative Strength Index (RSI) is an stochiastic oscillator that moves up and down in response to changes in market rates.

It has garnered great respect among traders as one of the most accurate indicators for evaluating current market trend strength.

Here is how it works. A reading of 30 or under is considered "oversold" and identifies a potential rate increase. A reading of 70 or higher is considered "overbought" and identifies a potential rate decrease.

The Best Forex Brokers + Trading Platforms

Broker	Our Rating	Description	Minimum Deposit	Regulation	Visit
IQOption	5	Stylish & Powerful Platform Trade Bitcoin + 12 Other Top Cryptocurrencies Plus Forex, Options, Stocks & ETF Trading	$10	CySec	Visit Broker IQOption Review	Risk Warning: Your capital may be at risk
XM Group	5	Free forex signals + market research Online education and webinars Fee free withdrawals and deposits	$5	CySEC, FCA, ASIC	Visit Broker XM Group ReviewROTW	Risk Warning: Your capital may be at risk
AVATrade	5	Trusted, regulated broker with 10 yrs experience Multi award winning company Segregated accounts with leading banks	$100	Central Bank of	Visit Broker AVATrade ReviewT1 ROTW	Risk Warning: Your capital may be at risk
FBS Markets.	5	Split second execution No requotes Range of accounts	$5	IFSC	Visit Broker FBS Markets. ReviewROTW	Risk Warning: Your capital may be at risk
HF Markets Ltd. (HotForex)	4.5	8 Trading Platforms Spreads from 0.1 Pips $0 fees on deposits	$5	FSC & CySEC	Visit Broker HF Markets Ltd. (HotForex) ReviewROTW	Risk Warning: Your capital may be at risk
Plus500	4.5	No commissions and low spreads Advanced trading tools Minimal account fees	€100	FCA, CySec :	Visit Broker Plus500 ReviewT1 ROTW	Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 80.6% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Easy Markets	4.5	Free Guaranteed Stop Loss Segregated funds at top tier banks Fixed spreads & negative balance protection	$100	ASIC, CySEC	Visit Broker Easy Markets ReviewT1 ROTW	Risk Warning: Your capital may be at risk
Markets.com	4	Tight spreads without commissions Advanced charting tools	$100	CySec	Visit Broker Markets.com ReviewT1 ROTW	Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 73% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
ETX Capital	4	Choice of two professional trading platforms – TraderPro and MT4 Free trading course for deposits over £1,000 Choice of Forex, CFDs, Spread Betting and Cryptocurrencies	€100	FCA	Visit Broker ETX Capital ReviewT1	Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 79.6% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
eToro	4	The leading Social Trading platform with 4.5m traders Follow other traders or be a leader Personal service and VIP perks	$200	FCA, CySec, ASIC	Visit Broker eToro Review	Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 65% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
InstaForex	3.5	'Asia's top broker' Wide choice of leverage options	$1	RAFMM, The Federal	Visit Broker InstaForex ReviewROTW	Risk Warning: Your capital may be at risk
EXNESS (NZ) Ltd.	3.5	Instant fund withdrawals - no commissions Tight spreads from 0.1 points Unlimited leverage	-	FDR (NZ), CySEC	Visit Broker EXNESS (NZ) Ltd. ReviewT1 ROTW	Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 74-89% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
FXPrimus	3	Trusted by 100,000s of traders Fully licensed in the EU by CySec Tight spreads and fast withdrawals	$100	FSC Mauritius	Visit Broker FXPrimus ReviewROTW	Risk Warning: Your capital may be at risk
OLYMP TRADE	2		10		Visit Broker OLYMP TRADE Review	Risk Warning: Your capital may be at risk

Broker rankings last updated 21/10/2019 22:07

The platform will calculate the RSI for you, but it is good to understand how it works, because there are different ways to calibrate it.

The basic number of trading periods that the RSI is set for is 14 – this was the original value that the inventor set for it. This can be changed, and some traders have found different values useful.

However, it is wise to start with the original value and to observe its operation before experimenting.

The first components to be calculated are the total average gains and the total average losses. This information is necessary to arrive at the relative strength (RS) value for the currency pair.

Average gains are calculated by adding up all the gains for the past fourteen reporting periods and dividing by 14; average losses are calculated in the same manner with the total of all losses for the previous fourteen reporting periods summed and divided by 14.

The Relative Strength is then converted to an index value and plotted on a scale from 1 to 100.

Using the RSI in trading is much easier than calculating it. When the “overbought” or “oversold” indication appears, watch for the trend to move in the opposite direction.

But, if a currency pair has remained overbought or oversold for a very long time, and no movement takes place, it’s often the case that a further move in the same direction (higher or lower) will occur.