Many Forex Traders, know the power of RSI ( Relative Strength Index ) which helps to measure the strength and direction of the markets. Default settings are 14 period RSI applied to close. RSI comes under the class of momentum indicator which usually indicates how far the current trend will be available in the financial markets. This concept was developed in a book, New Concepts in Technical Trading Systems by Welles Wilder. With this concept of RSI, a trader can identify overbought and oversold conditions, trend continuation and reversal patterns. With MetaTrader Terminal, user can know the overall action of RSI over a time frame at a click. No need to worry about the calculations, everything is done for you. Yet one should be aware of the settings of RSI. I have used default settings of 14 period and applied to close. RSI works well on longer time frames. [adsense]
Strategy behind RSI Expert Advisor for MetaTrader 4:
As a simple strategy, we have automated RSI Expert Advisor with certain known levels. The EA will open a long position when RSI value is between 25 and 50 & open a short position when RSI value is between 50 and 75. As a closing rule for positions, a long position will be closed if value breaches above 65. Short position will be closed if RSI value goes below 35.