As in every investment tool, there are many investors who prefer short-term investments instead of medium and long-term investments in cryptocurrencies. Although short-term investment carries greater risks compared to medium and long-term, it can also provide greater gains.
As it is known, many traders direct their investments by reading charts or using some technical analysis tools. In this article, we will talk about the RSI tool that many people use especially when trading daily.
What is RSI?
We can translate the Turkish equivalent of this tool, which is Relative Strength Index, as Relative Strength Index.
RSI is an indicator published by J. Welles Wilder in 1978. To put it briefly, the RSI is used to determine which direction the prices might tend to go, by looking at the strength of the increase or decrease. Let’s explain how to use this tool in cryptocurrencies together with pictures.
For example, when we look at the BTC / USD chart on tradingview.com, we open this tool by clicking on the text “Indicators / Relative Strength Index”.
The graphic above opens. Movements going up or down from the area shown in pink here are considered buy and sell places. In the green area, it is understood that the price of the coin is low and will increase according to the current volume, and in the red area, the price of the coin is high and decreases according to the volume.
Looking at large periods when trading based on the RSI indicator (at least 1 hourly) will give more accurate results.
In other words, green parts are buying and red parts are selling. Considering that many investors benefit from these tools while trading during the day, you can earn money with daily buy-sell transactions with this tool.
*It should be noted that these transactions do not always work 100% as described and bring serious risks. This article explains what the RSI tool, which is on almost every stock market, does. What is told is not investment advice.