02-18-2014, 08:52 PM
I do not use RSI for sell decisions. Not being a trader, my infrequent sell decisions are based primarily on valuation, and then some combination of distances from one or more moving averages.
I rarely use RSI for buy decisions because the extreme oversold conditions that RSI can signal are so rare. Readings below 20 almost never happen in the stocks I follow, but when they do, I check my pulse and then look over my buy candidates list and my cash balance to see if I want to buy. For example, at the start of this month, both MO and PM had readings under 20, but I bought MO because it met my valuation criteria and I wanted more, but I did not buy PM because although it met my valuation criteria, I did not want more. Another example is LINE, which in early July of last yet had its RSI go below 20, but I did not buy because although it met my valuation criteria, I did not want more.
And yes, RSI like all technical indicators is right except when it is wrong. That is why I never use it in isolation.
I rarely use RSI for buy decisions because the extreme oversold conditions that RSI can signal are so rare. Readings below 20 almost never happen in the stocks I follow, but when they do, I check my pulse and then look over my buy candidates list and my cash balance to see if I want to buy. For example, at the start of this month, both MO and PM had readings under 20, but I bought MO because it met my valuation criteria and I wanted more, but I did not buy PM because although it met my valuation criteria, I did not want more. Another example is LINE, which in early July of last yet had its RSI go below 20, but I did not buy because although it met my valuation criteria, I did not want more.
And yes, RSI like all technical indicators is right except when it is wrong. That is why I never use it in isolation.