The RSI (Relative Strength Index) indicator is an analysis tool that facilitates determining the right times to enter and exit the markets. It is based on comparing the profits generated by high prices and prices lower than the current price of a stock or financial instrument.
Here are the basic steps to using the RSI indicator:
1. **Select the period**: You can choose a specific period, such as 14 days, to analyze the movement.
2. **Calculate the profits generated by high prices and low prices**: The profits generated by high prices and low prices are calculated during the specified period.
3. **Calculate the RSI indicator**: The RSI indicator is calculated using the following formula:
\[
RSI = 100 - \left(\frac{100}{1 + RS}\right)
\]
Where RS is the ratio of profits generated by high prices to profits generated by low prices.
4. **Analyze the values**: The values generated by the RSI indicator are analyzed to determine the right times to enter and exit the markets.