The Relative Strength Index is classified as a momentum oscillator and was developed by Welles Wilder in his 1978 book, "New Concepts in Technical Trading Systems"
RSI at a Glance
The Relative Strength Index (RSI) is a very popular technical analysis tool measuring the magnitude of a price movement and aiming to identify Overbought/Oversold Markets. RSI can be proved a reliable technical indicator for day-traders. It is better to combine RSI with an additional indicator in order to be sure about the continuation or the reversal of the master trend.
■ When the price of a financial asset is trading in an uptrend and RSI crosses from below 30 to above 30 it is considered as a strong buy signal (call option).
■ When the price of a financial asset is trading in a downtrend and RSI crosses from above 70 to below 70 it is considered as a strong sell signal (put option).
■ In general RSI below 15 indicates a solid oversold market and RSI above 84 indicates a very strong overbought market.
Building Customized Indicators or EAs for Binary Options Trading
There are many different methods and strategies for trading Forex, CFDs and Binary Options. The method presented below involves the development of customized strategies. These strategies can be applied either:
(i) manually via the use of a custom indicator, or
(ii) automatically via the use of an Expert Advisor
How to Create a Customized Indicator or an Expert Advisor (Robot) for trading exclusively Binary Options
In order to create our custom strategies, we are going to use the web app ExpertAdvisor Builder. This app requires no install, no programming skills, and it is really free for creating indicators. If you want to build Expert Advisors (robots) you have to pay a one-time fee.
Note: The same web application can be used for creating EAs or indicators for MT4, MT5, and Tradestation in order to trade Forex and CFDs.