Have you ever wondered what makes a Forex trading signal a success? Obviously if it makes pips, there is very little if no drawdown, it happens often and you can count on it to be successful much more than it fails. Wouldn’t that be the definition of a successful Forex signal?
I would like to give you some information that took me nearly three years to find and I stumbled on it while reading a book by Constance Brown a well known trading author. In her book she mentioned that she knew Andrew Cardwell THE expert on RSI, the Relative Strength Index. She said he could discuss the nuances of RSI for hours. This was enough to get me interested.
Now almost 3 years later I have discovered mounds of information on RSI that is not available in any books I know of, or is nowhere on the Internet other than in my eBook, my website and the articles that I have written for EzineArticles. Here is a little of what I know.
Reversals are little known
Reversals are trading signals discovered by Cardwell as a student of Welles Wilder the man that created the RSI. Welles Wilder moved on to other things but Cardwell stuck with RSI and in doing so discovered reversals.
Reversals are not divergences
Many people associate trading RSI with divergences. But Divergences are signals on RSI that indicate a trend is slowing and will retrace. Reversals are momentum signals that do something much more productive.
Reversals mean trend continuation
Reversals are trading signals on RSI that mean price is ready to rejoin the previous trend. Trading with the trend is a much more powerful way to trade simply because momentum in trading is strongest with the trend than against it. Reversals tell the trader when momentum is changing in the direction of the trend and they can be found on any currency pair and any time frame.
Reversals read momentum
RSI trading is about trading with momentum. There are 4 RSI Trading Signals all which reveal information about momentum in the market. If no momentum exists than regardless of the signal there is no trade.
The RSI reversal is one of the best kept secrets in trading. Traders who learn how to locate these reversals or use The RSI Paint Indicator which automatically locates these signals will benefit with trades that are highly profitable because they are momentum trades with the trend.