We highly recommend combining the Bollinger Bands with this indicator – it’s the perfect match. There are two types of tops that you need to know about:
- After a trend move, price fails to reach the outer Band as the uptrend becomes weaker and this signal is usually accompanied by an RSI divergence.
- During a consolidation, price spikes into the outer Bands which get rejected almost immediately.
"Dynamic RSI is one of the most popular indicators used by MT4/MT5 traders"
So, Starfield Trading created the cTrader Dynamic RSI indicator, a perfect match between Bollinger Bands and a Moving Average and this provides a solution to the problem by creating a buy and a sell limit that change depending on the standard deviation (volatility) of the relative strength index, RSI, indicator.
The Dynamic RSI indicator is designed to profit from existing trends and predict future trends based on current and past trends. It is a revolutionary indicator primarily based on the well-known RSI indicator. However, the RSI indicator is restricted by the static oversold and overbought levels set by the user, which in essence make it inefficient in this role when applied to a dynamic market such as Forex. Depending on the existing trend, whether its an up, down or sideways trend, we should be using different levels that adapt to the current trend of the market.
This is an indicator that can adapt and set dynamic oversold and overbought levels in order to maximize profitability for the user and by recognizing past trends and evaluating them, the indicator is able to predict approaching trends with great accuracy and set the levels accordingly.
How The Dynamic RSI Works
The indicator is simple to use because it has an interface similar to the RSI indicator. However, while RSI indicator levels are static the Dynamic RSI ones are dynamic. The signal line is created by a moving average and the price line is created by multiplying the standard deviation of the RSI over a certain period.
These dynamic lines form boundaries and are used to trigger buy and sell signals. So, instead of buying a stock if its RSI value is lower than 30, the Dynamic RSI indicator will tell us to buy that stock if RSI is greater than signal line and the signal line is greater than price line or when RSI is greater that price line. In opposite, you have a sell signal when RSI is lower than the signal line and the signal line is lower that price line or when RSI is lower that price line. The Buy stop signal comes when RSI is lower than the signal line and sell stop signal comes when RSI is greater that signal line.
One of the advantages of Dynamic RSI indicator is that you not need to remember all the rules because this is coded in indicator and you can see all signals in the right side of the indicator.
Much more, the Dynamic RSI indicator offers also a visual signal for trend changing. To do this and to eliminate the false signals, these signals are based on time series moving averages, Hull moving averages and Bollinger Bands volatility.
Why Is the Dynamic Zone RSI a Winner?
The movement of the RSI is derived from price and tries to eliminate some of the “noise” of the market and it succeeds to do so. If you pay attention to other stuff (like the angle of the channel created by the bands or support and resistance levels), you can incorporate this indicator into a successful strategy.
To eliminate the most false signals, we recommend using this indicator together with BBands, MACD, CCI and Stochastic indicators. (Note: We will provide a system trading with this indicators, or you can buy every from these indicators separately.)
Configurable Parameters Explained
Your adjustable parameters are shown below with explanations of the less obvious ones.
~ Source Code Not Included ~
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We offer a 7-day free trial of this indicator, you will need to contact us and ask for the trial and we will send it to your email address.
Please do not forget to tell us the name of this product when you contact us.
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Watch The Indicator Real-TimeJust click on the link below to watch the indicator working with cTrader