Buy low sell high. But when do you buy? And when do you sell? What I think is important to remember isn't always getting in at the exact top/ bottom, it's about making consistent profits. A good trader isn't right 100% of the time nor does a good trader get perfect entries and exits. A good trader is simply consistently profitable. Making a small profit is better than making no profit of losing money. Using RSI you can find excellent exits and entries. Some people teach that if the RSI is overbought you sell and when it's oversold you buy. To some degree that is true but I would NOT recommend following that. Why? Technically it's overbought at 70, so do you sell there? What about when it's 80 and it still hasn't gone down? What about when it reaches 90? In hindsight it makes sense. Every time it's overbought the price eventually comes back down. What I look for is divergence. There is bullish and bearish divergence.
Bullish Divergence- Higher lows on the RSI but lower lows on price
Bearish Divergence- Higher highs on price with lower highs on the RSI
As you can see on the chart when bearish divergence occurs the price drops off. Price continues to go higher despite RSI going lower. When the indicator and price are heading different directions, divergence is occurring. So next time you are in a trade look for divergence. It may not always appear. Look through different time frames to see if you can spot the divergence. For Tron, the 4 hour chart has worked well for spotting divergence.
Bullish Divergence- Higher lows on the RSI but lower lows on price
Bearish Divergence- Higher highs on price with lower highs on the RSI
As you can see on the chart when bearish divergence occurs the price drops off. Price continues to go higher despite RSI going lower. When the indicator and price are heading different directions, divergence is occurring. So next time you are in a trade look for divergence. It may not always appear. Look through different time frames to see if you can spot the divergence. For Tron, the 4 hour chart has worked well for spotting divergence.
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We got a max 7% bounce since initial post, using an RSI divergence strategy. Note that I am not bullish on tron at the moment. I am waiting for more signs of bullish movement. This is meant to show this strategy in real time
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It's also important to remember that divergence doesn't necessarily mean a whole trend reversal. It could be a simple short term change. So bullish divergence doesn't necessarily mean the whole market will shift towards a bullish bias. It's one factor to consider