Here’s an actual photo of the RSI indicator that bucket needs to be a little bigger though and here we are at the RSI video not too long ago I made the ATR video which is the single best indicator you can possibly use make sure you see that video if you haven’t you’re going to want to but I also before that made a video called the Dirty Dozen and we’re gonna look at that in just a moment and this is the first item on that Dirty Dozen list and I’m gonna go over because indicators wise at least it is the absolute worst so in this video I’m going to show you why the RSI is a terrible option for your Forex charts now I understand there are a few different types of people watching this either you are already a fan of no-nonsense Forex and you’ve seen the Dirty Dozen video and you understand why I do what I do and you are probably never ever going to use the RSI there are some of you who are just starting out trading for the first time and don’t know what to use and are looking for a direction and videos like this are tailor-made just for you and there are some of you who are using the RSI right now and actually like it you guys are the ones that I need to talk to the most watch this entire video and at the end of it if you are still on board with the RSI I cannot stop you at the end of the day it is your money but for the rest of you – there’s a lot of good knowledge in this video and I’m gonna go to my own charts towards the end don’t fast forward all the way to the end because it’s not gonna make a whole lot of sense if you do but I’m gonna cover quite a bit here so if you are new to the channel and you have not seen the Dirty Dozen of it a video here is the list these are twelve of the top tools that I can guarantee you if you’re actively trading Forex right now and you have not seen one of my videos before that you are using at least one of these and in that video which I will link below so you can see it later I gave a little 30 second to 45 second blurb on every one of these showing people how faulty and outdated and ridiculous these tools are and I also said in that video that I would go back and make an individual video on every single one of these and it is the RSIs turn and I wanted to start here because out of pure indicators in terms of Google searches that these get googling RSI or relative strength index will yield you more Google searches than anything else on this entire list when it comes to pure indicators and I want to kind of keep the indicators train going here so if you didn’t see the Dirty Dozen video already here is what I said about the RSI so first off it was created in 1978 spot forex trading as you and I know it wasn’t even really around until 1996 and this thing was created almost 20 years before it and is crated for stock trading which does not operate in the same way Forex does mainly because in stock trading things can actually be overbought and oversold but in forex that’s not the case watch my reversals video I’ll link that one down below to stocks actually have intrinsic value they can by definition be overbought or oversold currency pairs can go as high or low as they want until a government entity actually steps in and does something about it but that can happen three thousand five thousand pips down the road so just by how old this thing is what it was actually created for which was not forex and what it is trying to do you can just stop here and many people saw this and said ok yeah I’m not using this anymore that’s all all the information I need all the evidence I need but some of you are gonna be a little bit of a tougher sell so let’s go ahead and move on now what I really want to know and the people who use the RSI right now are the people I’m talking to why do you use it I already know the reasons why and we’re gonna go over those reasons one by one and I’m gonna try to dispel them one by one to see if I can talk you off this ledge first off you probably use it because it’s very easy to use and I agree it is for those of you who are brand brand new to forex trading and don’t know how to use the RSI it goes something like this now there are a couple different ways to use it but the way almost everybody who uses this indicator will actually use it for is they’re gonna wait until this line gets down into now I’m using air quotes oversold territory and then they wait until the line comes back up across the thirty you set your levels at 70 and 30 when this line gets back across the 30 that is a signal for you to go long because it is confirming what they think is a reversal and so then conversely if the line were to ever get up into this overbought territory above 70 you would wait for it to come back down and once it does that will give you a short entry real simple super easy to use I agree but this point will come into play later all right let’s keep going why else might you use it well it’s extremely popular you see a lot of people on Twitter and on different web sites and even on YouTube using the RSI and you figure well this many people are using it I should probably be using it too who doesn’t want to be popular who doesn’t want to follow the crowd these people seem like they know what they’re doing and again between RSI indicator and relative strength index this thing it’s about 25,000 searches on Google every single month if you didn’t know any better and when you first start out you didn’t know any better you would think well this is the way to go and now fans have no nonsense Forex they’re already screaming the answer at you if you’re popular you’re done because you are now part of that 99% that and this number is low when I say low it’s probably closer to 100% than it is 99% 99% of traders who forex traders who either lose money breakeven or never quite make enough money to get where they can actually distance themselves from their regular job and start doing this for a living which is what most people almost everybody I’ve talked to that actually trades ultimately want to do and if you are doing the things in forex that are popular this is where you are going to end up because another video I’ve made probably the most important video I’ve made up to this point the Big Banks video big banks eat the popular kids they find out where the popular money is going and they take it they move by moving price the other way it’s really really simple if you don’t understand what I’m saying please go watch this video after you’re done I’m gonna link that one below too but just know this so many people use the RSI and if it is giving so many people a long signal for example you have become a huge blip on the big banks radar and that is giving them permission to take price the other way whenever they want they might give you a win here and there just to keep you in the game we’ll talk about that in a bit too but this is not stock trading this is not the herd mentality the mechanics of this market move the exact opposite you do not want to be popular at all and if you were doing anything that would make it so that would make you that way you need to change right away and things like that big banks video will explain further because I know when I first tell people this it’s kind of hard to believe so another reason you use it is you were shown from the start this is a big one and this is I’ve major problems with Forex education in the way it teaches people from the start and that’s a big reason why videos like this exist people have said hey you should you should put up your own training course and I don’t want to do that I just I would rather wait for you to go get your training somewhere else and say ok now that you’ve learned this here’s what you should actually do but when you were first taught Forex from the start it was super exciting because you learned all these little tools and indicators and I guarantee you no matter who taught you every example they gave you works like a charm gave you that perfect entry every time which is super super unrealistic you learn that the hard way as soon as you get out there and started trading yourself but the RSI because it is so easy to use and easy to read told you that with the least amount of effort all I have to do is put this on my chart and every time it gives me a signal just take it it’s super easy and that is a reason why so many people still use it and put it on their charts but did you ever once question the people that were showing you how to trade you probably didn’t hear some dirty little secrets about anybody who’s associated with Forex education at the beginner level most of them don’t actually trade if people are in the forex industry and they are making money by being instructors by being news reporters whatever they do most of them don’t actually have to trade anymore believe me if they did if they had to rely on the money they actually made by trading they wouldn’t be using hardly any of the things they were going to show you because they would lose but I’m telling you you right now could just take all the things you learned when you first learn how to trade Forex repackage them and put them under your own name and put it out there and make money people would buy it especially if you’re good at marketing because people just don’t know any better they’re not gonna question your ability to trade yourself they just want to learn and showing them things dumb dumb things like the RSI and Fibonacci and stuff like that especially if you should only show them examples that work well you’re gonna get them on your side every time this is a problem also most of these people don’t even know about other indicators they know about what’s on the Dirty Dozen and maybe two or three other tools they can put on their chart and their knowledge stops there most traders knowledge stops there there are thousands of indicators and tools that you can put on your Forex chart at any given time most people only know about fifteen to twenty maximum I am blown away by this never once did these people stop and say you know what I just keep losing these indicators are terrible maybe there is another way I did that and over time I had tested thousands of indicators on all different time frames on all different currency pairs to get to the ones I use now and guess what guys there are indicators that were actually developed by forex traders in this century for the purpose of forex trading which is the opposite of everything you saw on that Dirty Dozen video but did any of these instructors ever have the gall to show it to you no because they didn’t know either they showed you the RSI and that’s why you’re losing and and I’ve alluded to this already the worst thing about it is and this isn’t just an education this is everywhere this is all over Twitter for one and I’m not the type to talk shit to people on Twitter but you really really want to when you see things like this because it just just irks people like me when you first saw the examples they showed you you thought to yourself wow look at how well this works it must work every time what you didn’t know is that they selected the perfect currency pair on the perfect time frame at that one perfect moment in time where this indicator worked really really well and shit like that drives me crazy and the funniest part about when they do it with the RSI is if you actually look at it on some of these examples it still doesn’t work I’ll show you this is great I don’t know who did this or where this is from but this is a clear example of you being lazy and thinking this thing works when it actually doesn’t so here’s the overbought side of things and then there’s two different times it gives you a signal to go short and price did eventually go short over here two different times you could have gone long and price eventually went long but let’s look at this more closely so your first signal to go short is here alright right here now I’m using a mouse so I’m going to go straight up as I can so that signal was on this candle right here now the very next candle shot upward this candle took out a lot of people’s stop losses and after it closed a lot of people probably looked at that because that’s an engulfing candle which for a lot of people is a sign that price is going the other way and they said yeah it’s time to exit and move on now if you weren’t one of those people that’s fine if you would have said okay my stop-loss would have actually been up here or maybe even up here okay I’ll go with that but for a lot of people they exited right after this candle and then the indicator itself moved back into that overbought territory with this candle right here so now your beloved indicator is telling you that this thing is back into overbought territory so are you going to go short at this point? no you you’ve just been given another reason to exit so let’s say you did not exit and you’re still in this trade okay so it goes down a little bit back to where you bought it went back up and then you finally get this down candle here now if you’re honestly sitting there saying well this would have hit my take profit mark I will say probably not if you really are somebody who had their stop-loss this high your take profit level was probably somewhere down here if not lower so I will call bullshit on that and then price went back up again and then down and back up again if you are one of the very very few people who were still in this trade and believe you me if you are a sane minded discipline trader you would have been out of this trade a long time ago but for some reason you’re a lunatic and you stayed in it you would have actually reaped the rewards to a point and rode it on the way down so good for you if that was the case I don’t like your chances going forward if that’s the type of trader you are but just understand that most people would have been out a long time ago and not have made any money from this move here because especially when this thing was doing a whole bunch of nothing this indicator was going down usually when people see indicators going down and price going nowhere that’s a yet another sign to exit all right so we’re gonna let’s go look at the more ridiculous example which is are these two Long’s right here let’s start with this one this one gave you a long entry on this candle right here and then what immediately happened after that these two huge short candles nobody was left in this trade if you’re the type of person said well I would have been because my stop-loss is way down here I don’t believe you and if for some reason you are it will not be long until you lose all of your money if that’s how you approach trading any sane minded trader would have been long gone even way before price is allowed to get this far down that was a huge loss all right so let’s wait for the next long entry which is this arrow right here oh that is probably this candle right here so this gave you a whole lot of nothing and then the very next day boom this huge marabozu short candle down bad bad news again nobody would have been left in this long trade but if you were being lazy and looking at it in hindsight you would have said Wow it was overbought there and price went down it was oversold here and price went up but if you’re looking at it as an actual trader even when it works it just gave you four different losses how about that the RSI is one of the few indicators out there that even when it works it doesn’t work but look I’m not mad at you for using it you have a lot of reasons why especially starting out that you would have used it you know these are perfectly valid reasons if you didn’t know any better but another big reason that I have any in touched on yet is the RSI is one of the most televised indicators out there if you were somebody who watches CNBC or a Bloomberg you will whenever they actually make some desperate attempt to show technical analysis you will see this indicator a lot so Bloomberg mostly does stocks but this is an example of a chart you would see with them as you see this weekly RSI below and then here is another chart so they do have a habit of using it and why do they use it because it’s very easy to see like we said before people who watch these shows usually know nothing about technical analysis and so you need to show them the easiest dumbest thing you can possibly show them or else they’re not going to understand what you’re doing now Bloomberg actually has the decency to put currencies up every once in a while and they’ll use the RSI too because especially when you shade in these little overbought and oversold levels they’re a lot easier to see and understand than an indicator that actually works but if you’re the type of person that started using the RSI and then saw all these smart people on TV using it too no wonder you’re still using it now and no wonder you’re still in the back of your mind trying to argue me on these points but let’s take a look at what really happens on these shows for one they are not technical traders Bloomberg and especially CNBC spends pretty much all their time on fundamental analysis because that’s what the people who watch those shows want to see most of these people too are not even traders again they wear nice suits they have these prestigious jobs they speak really well they’re not actual traders more often than not and if they are they’re definitely not forex traders you’ll see some legit stock traders on there I’m sure but actual technical forex traders almost never exist in this world for some reason and again neither is their audience the people they are talking to don’t know anything about technical analysis so if you’re showing technical analysis to a bunch of people who have no idea what you’re talking about the best thing to show them is something dumb and easy like the RSI so don’t think that just because you see it on TV that it is more valid than anything else out there they’re using it because it’s easy and they’re also using it because again like all those instructors who actually have studied technical analysis at some point they don’t know any better they don’t know about all the other indicators out there that work much much better so let’s go ahead and touch on the last reason that I will bet is one of the reasons why you still use the RSI and that’s because you’ve had some success with it before and I went over this in the big banks video – it’s called blackjack theory or Vegas theory if you were to go to a blackjack table for the first time and on the very first hand you would have actually gotten a blackjack and gotten that two to one or six to five pay off you know whatever they do that feeling is so intense that you would allow yourself to lose the next five to ten hands before ever even thinking to yourself okay maybe this isn’t the right game for me and God forbid in the next ten hands after that if you were to actually win three or four of them well then they got you you’ll sit there and lose all your money and take it all the way down to zero before realizing what’s really going on here and the same can be said for the RSI the big banks will give you a win with these things sometimes because if they didn’t then you’re just going to quit but if they just give you a win here and there it is enough for you to hang on to this thing because the thrill of winning is so strong that it overrides any of the losses you might have in the future but if were to just do this if you were to just make a separate demo account and do nothing but trade with the RSI and nothing else and track those wins and losses for two months and see where you actually were I bet it’s gonna paint a really sobering picture but most people don’t have the discipline to go out and do something like that and to test things that way they’re so stuck in the euphoria of those times where it actually works they will ignore the times when it doesn’t and when they look at their account at the end of the year it is way down so let’s transition out of the reasons why you probably use and I’ll just tell you the reasons why I don’t like it don’t forget the earlier slide the Dirty Dozen slide a lot of times this was a reason enough for most people to say oh wow what am i doing yeah I need to move on to something different there are clearly better options out there but let’s just say that did not convince you the RSI does not even do a good job at what it is supposed to do remember that example I showed you before whereas trying to show you how well it worked and it ended up being complete calamity to your trading account often even when it looks like it works it doesn’t work and on top of this it was created for stock trading I actually know some professional stock traders many of which will actually use a combination of technical analysis and fundamental analysis because that’s what you you’re supposed to do when stock trading and none of them use the RSI some of them did but as soon as they were introduced to better options they get rid of the RSI or right away it did not take long sometimes it’s just a matter of being shown a better option which we here on No Nonsense Forex are going to do so if you haven’t subscribed by now subscribe because you’re gonna want to see this now there is an a counter-argument to this and it is an argument I have a really big problem with they say well the RSI does work really well in range-bound markets in trends it doesn’t work at all you get murdered but in range bound markets it actually works well so what do I mean by that if you don’t understand what that means so when price consolidates and falls into this little range right here and when we say a range pretty much means it’s hitting a line here and a line here and when it does that people want to convince you that now this market is very easy to trade because it’s gonna bounce off here and if you’re using the RSI it’s gonna give you a really nice short signal and when it comes here it’s gonna give you a really nice long signal here is the problem I have with this guys you don’t know when a range is coming it’d be so awesome if we did if we were just be if we’re just able to pick out some random point on a chart and be like hey okay consolidation is just around the corner get all your range trading tools out and we’re gonna we’re gonna make a lot of money but it doesn’t happen that way you only know it when it’s too late once you see a range actually forming it is probably about to end I love people who show trend lines and support and resistance lines like look how many times this thing has hit this line by the time it has done that it is almost over so understand this is not an actual chart this is just a drawing so how many times this hit 1 2 3 4 5 6 7 8 times you almost never ever see that and if you do it is only a matter of time before price breaks out of that range it starts trending and if you’re trading a quote range bound market you are going to get smashed because when price does trend and you’re trying to use these reversal indicators you get absolutely destroyed go watch that reversals video if you ever want to know why a price trends as long as it does sometimes it’s because there are an endless supply of reversal traders with their stochastic sand their RSI trying to call reversals and as long as those people outnumber the people who are actually following the trend price is going to keep going and these poor reversal traders just get smoked over and over and over again any money they made when price was consolidating is erased immediately and then the losses start happening so let’s go ahead and go to my charts and I will show you not cherry-picked examples but actually real world right now examples of how this thing just completely fall apart so here is what I’ve done let’s go ahead and push this forward just a bit this is a let’s put it back even this right here is about one year’s worth of data on the most popular traded currency pair by far and we’re on the daily chart which is the time frame that everybody should be trading if you didn’t already know that that was a podcast episode I’ll link that down below too but I went ahead and put the RSI down below on the default setting that almost everybody uses and let’s go ahead and see on the world’s biggest stage not some cherry-picked example on the most popular example I could possibly give you let’s see how well this thing works now didn’t give you any signals for a while and then finally gave you a little one right there so let’s go ahead and pull up a cursor and see how well that would have done now it wants you to go short right here on this candle here now very next candle shot up about 70 pips if you would have stayed in that trade you’re telling me your stop-loss is more up here so by the time it actually did give you some profit it didn’t even give you a hundred pips with a profit on the daily chart chances are like I said before if your stop-loss is up here your take profit is down here somewhere and you did not profit on this trade and if you didn’t look out because price shot back up right afterwards now let’s look here we are now in overbought territory and you have a signal here let’s check that one out that would have come on this candle right here the RSI is telling you to go short right on this bar and you didn’t make anything you may you made 14 pips on the daily chart immediately this thing shot way up again that would have been a tremendous loss depending on where your stop-loss was now the next one this one it’s hard to say I’m gonna be nice and give this one a pass because it’s so borderline but your next one was here and I think this one actually worked let’s see you guys want to zoom in I think it might be better if we just zoom in on this so you can see this a little better this one told you to enter it was at this candle oh is this candle here so this one did go down some and you probably made a little bit there you didn’t make a lot but there was definitely room to take some profit there but it didn’t give you that nice trend that you were wanting on the reversal it came up back back up pretty quick so if you took half off down here half as all you got because this thing shot right back upwards so in this little cluster of shorts it gave you there was some really bad losses and one medium-sized win maybe and that was it so let’s move over to here we’re now you’re getting long signals this was technically one it got up there you can see on that little tag here the RSI is thirty point nine four so it did close above that that would have given you a long signal let’s see how that did I don’t think it’s too hard to recognize that that did nothing but go short you went long price did nothing but go short that that was really bad really bad look at the next one on that little retracement it gave you another long entry where was it right here alright well how many pips were you wanting on the daily chart hopefully you’re wanting more than 80 87 you might have again you might have taken a little bit of profit there but for the most part you got no trend that you wanted and you got nothing but futility all the way down again this thing just keeps on killing you how about this one this one was actually good this was the win this is the win they used to keep you in the game because this one from the start did you well didn’t do you great like I said you want on the daily chart you were hoping to gain more than 150 pips max but it did give you a win and then over here it is yet to be seen but let’s zoom back out after all that all those entries you had two little to medium wins and a bunch of losses on the world’s biggest Forex stage on one of the most commonly used indicators on earth terrible and this is a currency pair that not only trended but did quote range to actually don’t even know if that can you really consider that arranged there’s your top there’s the bottom it didn’t really touch anything so yeah a lot of people would call this a range it’s not even a range and there is no money to be made here when it comes time to actually prove it this thing just completely falls apart alright we’ll move on so I mean have I given you enough evidence at this point I mean in conclusion it’s real simple don’t use the RSI ever I mean the good news is there are much much better options out there and we’re going to be talking about them over time and I’m going to bet you’re going to want to know what those are and the best way to find out is to subscribe to this channel I mean I have given you so much evidence of why this thing is terrible and every other youtube channel out there and twitter handle that actually uses this thing is not doing that they’re showing you why it is a good idea to use the RSI and then you wonder why you end up like the 99% this channel has not been around very long and I have already changed traders results instantaneously simply by getting rid of something they’re already using that isn’t working just imagine how far along you’re gonna be when this is all said and done but you’re not gonna get there with these other YouTube channels and these Twitter feeds that are showing you the same dumb garbage over and over again there’s no way you’re gonna be in that 99% your whole life and that’s not why you got into forex trading in the first place if you want to really get there click on the links below on some of my other videos and start changing the way you think about everything into that point one percent mentality and in return I will make sure that every single video I make from here on out is designed to get you that much closer and closer to getting out of that 99 percent and getting into that point one percent for good I will see you on the podcast and I will see you in the next video as well all right guys go get it
The Relative Strength Index, or RSI Indicator is one of the most commonly used Forex trading indicators on Earth. If that alone doesn’t raise a huge red flag, you need to watch this video.
In this Forex indicators review, VP shows you just how bad the RSI indicator is. And why is nobody else talking about this?
The RSI looked so easy when you first saw it. It worked so well every time somebody else used it. Then what happened when YOU went on to use it? Did you get the same results? There are many reasons why you did not.
Blog For This Video –
ATR Video –
Dirty Dozen Video –
Reversal Trader Video –
Big Banks Video –
Podcast Episode 3 – Which Time Frame is Best? –
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