Hello Readers. In this post, I’m going to show you how to use the Relative Strength Index on FinFormula. This is a really good indicator to learn.
What might be a good entry signal and what might be a good exit signal. The Relative Strength Index is a tool that I can use that tells me whether a stock may be overbought or oversold.
So If I come in here, and I look at it, I see these two Black lines. This is at 70, and this is at 30. So this is a 0-100 scale, and if it’s over 70, that’s typically the measure of whether a stock is overbought. If it’s under 30, that typically means that stock is oversold.
Overbought and Oversold are simply trader words that mean a stock could reverse its trend.
How To add it to your chart
1) Go to Studies, go to Add Study
2) Select RSI
Since we know what we’re looking for, we’ll just come down to RSI. Click on RSI. And that’ll add it.
The RSI isn’t a perfect indicator, but it can help you set Entry and Exit rules.