There are plenty of strategies you may employ in your trading. The important thing is to choose the right one for you and be faithful to it. Do not give up the minute something goes wrong. Analyze, readjust and learn from the mistakes. Today, I wish to present a Relative Strength Index Law strategy.
Relative Strength Index Law Strategy on IQ Option
As the name suggests, the strategy we are talking about here uses the Relative Strength Index tool. Once you are logged in to your IQ Option account go to the indicators icon and search for the Relative Strength Index. We are going to use the RSI with the period set at 5.
The indicator has a shape of a line that moves in the 0 – 100 range below the price chart. You will see three horizontal lines at levels 30, 50 and 70. 50 is the middle of the range and the other two indicate when the instrument is being oversold or overbought.
The RSI Law strategy can be used on different chart timeframes. The duration of the transaction should be, however, twice as long as the candlesticks period. I will be using a chart time frame of 5 minutes and so I will hold the trades open for 10-15 minutes. I use this strategy with Digital Options. There are 3 possible expiration times: 1m, 5m, 15m. Usually, I go for 15m, but the expiration time must be at least 10 minutes from the closing time of my signal candle (so from the beginning of the next one and the beginning of the transaction).
Opening short positions with the RSI Law strategy on IQ Option
When you wish to open a position for a price decrease, the market should be overbought.
To confirm this is the case, look at the RSI indicator. It should be above the line of the value 70. Now you ought to set the trade amount and duration (twice as long as the single candle period).
You can open a short trade when the candle closed and the Relative Strength Index crosses the 70 line from above on its way down.
Opening long transactions with the RSI Law strategy
To open a long position you should ensure the asset is being oversold. To do that, check whether the RSI line moves below the level of 30. If so, be ready to enter the trade. Choose the amount you wish to invest and set the duration of the transaction.
Now, you have to wait for the RSI to cross above the 30 level and for the candle to close. Go long at the opening of the following candle.
The Relative Strength Index Law strategy is quite easy to apply. You must add the Relative Strength Index to the chart and see how the indicator behaves. Wait for the closing of the candle and enter at the opening of the next candlestick.
This strategy uses the moments of the trend reversals. The short term RSI helps in catching short price fluctuations and the positions should be entered for quite a short time (twice the timeframe of the chart).
The signals received may sometimes be false that is why you may wish to add an extra confirmation tool such as, for example, a long term moving average.
Practice trading with the RSI Law strategy in the IQ Option demo account which is offered absolutely for free. Take your time to build the necessary confidence and move to the real account when you feel ready for it.
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