How to Use the Relative Strength Index to Make You a Better Trader

Every experienced Forex trader should know the four Relative Strength Index (RSI) trends in a currency cycle. The four cycles are: the positive and negative phases of divergence and reversal. These 4 RSI cycles have a direct correlation with determining the trend of a currency.

In the Positive divergence cycle, the price of the currency moves upwards and is considered to be bullish. This upwards movement helps the currency gain momentum. With momentum comes an increase in volume helping the currency price to keep climbing. As you identify this upward trend, you should enter the trade by purchasing the currency and keeping it until it hits its peak. Once the currency hits the peak of uptrend, a negative reversal starts to develop.

A negative reversal starts when the positive divergence loses momentum. Even if the price continues to increase, you will see a slow-down of momentum and a decrease in volume. When both momentum and volume decrease, that is signal that a negative reversal is developing. The negative reversal starts once the price stops moving upwards and starts to fall. At this point the price hit the highest and you should close your open trades to pocket your profits. Of course, at this point you will see this cycle turn into a negative divergence.

A negative divergence happens when the sentiment of the market turns from bullish to bearish and the price goes on a downfall or down trend. Many traders like to try to make profit in both movements by selling or shorting the currency here. However, a more advisable strategy is to sit and wait until the price hits rock bottom and a positive reversal starts to develop.

A positive reversal may be the most profitable position in your chart. At this point, the currency price hit rock bottom and it is starting a reversal and moving upwards again. Once you identify a positive reversal, you should buy the currency again. This cycle points the cheapest price of a currency and, in the long run, will yield you the most profits by following these simple steps.

As you can see, divergence and reversal cycles are an integral part of a currency behavior. By mastering the 4 RSI cycles, you could make great profits. Every trader should have a “go to” strategy when everything else seems to fail. This simple strategy may be that “go to” strategy and should be integrated to your trading toolbox.

How to Use the Breakout Cycle to Make Profits

A Forex trader is always aware of which of the 3 trading cycles (consolidation, breakout, or trend) a currency is before entering a trade. One of the most popular strategies to make a profitable trade is a channel breakout.

A channel in Forex trading is created by drawing lines between support and resistance in a chart when the market is in a consolidation mode. A consolidation is easy to identify in your chart with, the most common pattern being two almost horizontal parallel lines making your support and resistance levels. These two lines form a trading range in which the currency is trading over the period of time set in your chart whether it is a day chart or a six month chart or whichever time frame you choose.

As the name suggests, a channel breakout occurs when the price of a currency breaks either of the support or resistance channel lines. When the price breaks the resistance level, the currency is believed to be at the start of an uptrend. On the other hand, if the price breaks the bottom line, the market is believed to be at the start of a down trend.

Keep in mind that not every not every crossover of the lines should be considered a breakout. By using a combination of technical indicators such as Pivot Points, MACD, RSI, and candlesticks to determine price breaks, you should be able to differentiate a false breakout from a real breakout and trend setter.

By mastering this simple strategy you can make significant profits. If you set your trade properly with a tight stop-loss, you will minimize your losses or even make small profits if you entered a false breakout. The profits you make from a real breakout will more than make up for your small losses from the false ones.

Most professional traders use channel breakouts as part of their trading arsenal. By using technical indicators they can tell with almost absolute certainty when a breakout is occurring and, in those few occasions when the signals were false, their tight stop-loss help minimize their losses. When done properly this strategy can lead to great profits.

If you want to make the channel breakout even more profitable, combine it with a trading strategy that will profit during the consolidation cycle. By doing this, you would be adding profits while waiting for the price breakout to occur thus maximizing your profits for the same investment in time.

What To Look For When Choosing A Bitcoin Trading Bot

Cryptocurrency market has become very popular and every trader is looking to make it big with bitcoin trading. It is however a very volatile market that can be hard to keep up with, especially considering that this is a market that never sleeps unlike the stock market. To make things easier for traders, trading bots have been developed. A trading bot can be defined as software program which is designed to interact with financial exchanges directly so relevant information is obtained and interpreted so orders can be bought and sold on the traders’ behalf.

In essence, the bots make decision through market price movement monitoring and use of pre-programed rules so that losses can be stopped. The bot analyzes market actions like price, volume and orders according to your preferences and tastes as a trader and makes the decision. If you are into bitcoin trading, then you may want to choose the best bitcoin trading bot to ease out the process for you. But with so many bots now available, how do you know which one is best?

Customization and ease of use

The interface of a good trading bot should be easy to use by any kind of trader including those who know nothing about coding. All information necessary should be easy to find and the gains clearly shown together with all aspects of the trading that matter including buy orders and current sell. All you should be required to do is enter your pairs and numbers and then start your trading with a click of a button. Apart from being straightforward even for first time users, a customizable trading bot is even better. With this function, you will be in a position to change how the skin looks so you can have a program that you are happy to use every time.

Operating system compatibility

Not all bots are designed the same and not all traders will use the same operating systems. For this reason, you want to get a platform that functions on all the operating systems. With this kind of bot on your side, you can access your trades from Linux, Mac or Windows depending on the device you are using. With your orders and settings on a USB, you will only need to plug into any computer to continue trading with the operating system notwithstanding. A standalone bot that requires no installation and is compatible with all systems will prove very convenient in the end.

Support for pairs, coins and exchange

Apart from bitcoin, you could be a trader interested in other pairs, exchanges and coins. It can therefore be more helpful to find a trader bot that can accommodate different coins offered by major exchanges. A full stacked crypto bot will work great for a spontaneous kind of trader.

Other bot features that could prove to be helpful are notifications and reporting, real time and historical back testing among others. Find out what the trader bot can do and select accordingly.