There is an indicator called RSI TDI (Traders Dynamic Index)
Printable View
There is an indicator called RSI TDI (Traders Dynamic Index)
The Stochastic is useless if you don't understand what the price is doing. If you see a trend, forget it. But if there is consolidation, it does look there. Learn to read the market first, then put the indicators in. Not the other way around.
The RSI and the Stochastic are good allies, but if you use them without having a clear strategy, it�s like jumping into the sea without knowing how to swim. Don�t expect them to do all the work for you, they�re just part of the analysis, not the complete analysis. Many traders get frustrated because they don�t understand that these indicators need interpretation, not blind obedience. A tip that gave me a trader with 20 years of experience: if the price isn�t respecting key levels, forget what any indicator says. First study the price action and then use the RSI or the Stochastic as validators, never as your main compass.
Many people start with RSI and Stochastic because they see them everywhere, but nobody tells them that these indicators are delayed. That means they are always telling you what has already happened, not what is coming. So if you are entering just because the RSI is at 80, get ready for the whipping. That said, both can be useful if you integrate them into a well-defined strategy. For example, looking for an RSI divergence in a weekly resistance can give you a powerful input. But don�t expect miracles. Learn to read context first, and you�ll see how everything fits better.
If you want to use RSI seriously, forget the number 70/30. That�s for those who read generic blogs. The key is to observe how RSI behaves at different stages of the market. In tendency, you can stay weeks above 70 without a fall. The same goes for Stochastic. Nice crosses work only in books. In real life you have to see volume, market structure and reaction zones. If not, you�re going to fill your history of operations with unnecessary stops.
I started with RSI like everyone else, believing that I had the magic formula to get right into the point. Spoiler: I lost more than I won. I didn�t understand that an over-bought RSI isn�t a sign of sale, it�s just a sign of strength. Then I discovered the divergences and there it did change the story. When the price makes a new maximum but the RSI doesn�t confirm it, that�s when I get ready. But only if it matches a major resistance. Everything has to align, it�s not just seeing a line go up or down.
There's something no one tells you: indicators don't work if you don't understand why they were created. The RSI wasn't designed to give you tickets, it was created to show the speed of price movement. That's the base. When you understand that, you stop using it as a traffic light and start using it as a real analysis tool. The same thing with the Stochastic, which basically measures the price position within a range. If you use it without knowing that, you're operating blindly.
RSI and Stochastic work best in larger time frames. In 1 minute they are pure noise. In 4H or daily, there you do see interesting things. Divergences take strength and you can anticipate relevant turns. Now, if you only look at the number that marks 30 or 70, you will suffer. It is not black or white. The market has nuances, and these indicators are just one more nuance. I learned to see the full picture.
Most beginner traders use RSI as if it were an entry order. The RSI is below 30, buy now! Error. If the price is falling for a macro news, that RSI in 25 can stay there for days. The correct thing is to see the RSI as an alert, not as a sign. It tells you: "hey, this is extreme", but it is not giving you permission to enter. Your analysis must confirm whether it is worth it or not to act.
The stochastic is useful, but it has a big disadvantage: it is very sensitive. It can give you 10 false signals before hitting one. That's why I always combine it with well defined supports and resistances. If it crosses in a relevant area, there I do pay attention. I also set it to 14,3,3 because the default of 5.3 gives me too many erratic movements. There is no magic formula, you have to try until you find the adjustment that works with your style.