🎛️ RSI Settings: One Size Does NOT Fit All
Most traders open their platform, throw on the default RSI (14), and lose money. Why? Because the default settings were invented in 1978 for daily charts of commodities.
Markets have changed. Algos are faster. Volatility is higher.
To win today, you must tune your RSI to your specific strategy.
1. The Scalper’s Weapon: RSI (2)
Invented by Larry Connors, this is for Mean Reversion. It operates on the logic that price acts like a rubber band; if it stretches too far, it snaps back immediately.
Settings:
- Period: 2
- Overbought: 90 (or 95)
- Oversold: 10 (or 5)
The Strategy:
- Wait: Wait for RSI(2) to drop below 5. This means panic selling occurred.
- Trigger: Buy the close of that candle.
- Exit: Sell when price crosses above the 5-period SMA (Simple Moving Average). Why it works: It captures the “dead cat bounce” after a crash. Quick, dirty, profitable.
2. The Day Trader’s Balance: RSI (9)
For traders on the M5 or M15 timeframe, 14 is too slow and 2 is too fast. RSI (9) is the “Goldilocks” setting.
Settings:
- Period: 9
- Overbought: 70
- Oversold: 30
The Strategy:
- Use this for Divergence. Because it reacts faster than 14, it spots divergence (momentum loss) about 3-5 candles earlier, giving you a better entry on reversals.
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Get RelicusRoad Pro3. The Swing Trader’s Filter: RSI (21) or (25)
For traders on H4 or Daily charts who want to ride trends. Standard RSI (14) gives too many “Sell” signals in a strong uptrend. RSI (21) ignores the minor dips.
Settings:
- Period: 21
- Overbought: 70
- Oversold: 30
The Strategy:
- Trend Filter: If RSI(21) is above 50, only look for Buys. If below 50, only look for Sells.
- It acts less like an oscillator and more like a trend-strength gauge.
Advanced: The “Trend-Shift” Levels
Don’t keep your levels at 70/30. Shift them based on the market.
Bull Market Mode:
- Overbought: 80 (Harder to hit).
- Oversold: 40 (Price rarely drops to 30 in a bull market; the dip buyers step in at 40).
Bear Market Mode:
- Overbought: 60 (Rallies fade quickly).
- Oversold: 20 (Panic selling goes deeper).
Conclusion
Stop using the factory settings.
- Scalping? Tighten it up (2-5).
- Swinging? Loosen it out (21+).
- Trending? Shift your levels.
RSI is a precision instrument. Calibrate it.
Want RSI logic built-in? RelicusRoad Pro integrates RSI filters into its reversal arrows automatically.