Two Fundamentals Every Trader Should Know:
1: Using the Relative Strength Index (RSI)
Goal: Helps identify when an asset may be overbought or oversold.
Typical Settings: 14-period RSI.
How it Works:
Buy Signal: When the RSI drops below 30 (indicating oversold conditions) and then rises back above it.
Sell Signal: When the RSI rises above 70 (indicating overbought conditions) and then falls back below it.
Example: If the RSI drops to 25 and then rises to 35, this signal might indicate a buying opportunity.
---
2: Using Moving Averages (MA)
Goal: Helps identify trends and potential areas of support or resistance.
Common Settings: Short-term moving average (50 days) and long-term moving average (200 days).
How it Works:
Buy Signal: When the 50-day moving average crosses above the 200-day moving average — known as the golden cross.
Sell Signal: When the 50-day moving average crosses below the 200-day moving average — known as the death cross.
Example: The golden cross can indicate the beginning of an upward trend, suggesting a good time to buy.
---
Best Practices
Use Multiple Tools: Do not rely on just one indicator. Combining tools can help confirm signals and reduce false positives.
Adjust Settings: Every market is different —
