#TradingTools101 #TradingTools101

Here are two essential tools that every trader should know:

1: Using the Relative Strength Index (RSI)

Objective: Helps to determine when an asset may be overbought or oversold.

Typical settings: 14-period RSI.

How it works:

Buy signal: When the RSI drops below 30 (indicating oversold conditions) and then rises back above it.

Sell signal: When the RSI rises above 70 (indicating overbought conditions) and then falls back below it.

Example: If the RSI drops to 25 and then rises to 35, this signal may indicate a buying opportunity.

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2: Using Moving Averages (MA)

Objective: Helps to identify trends and potential areas of support or resistance.

Common settings: Short-term moving average (50 days) and long-term moving average (200 days).

How it works:

Buy signal: When the 50-day moving average crosses above the 200-day moving average — known as a golden cross.

Sell signal: When the 50-day moving average crosses below the 200-day moving average — known as a death cross.

Example: A golden cross may indicate the start of an upward trend, suggesting a good time to buy.

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Best Practices

Use multiple tools: Do not rely on just one indicator. Combining tools can help confirm signals and reduce false positives.

Adjust settings: Every market is different —