A forex trading strategy designed to make maximum profits from a long-term uptrend can be created using the Relative Vigor Index , or RVI, in conjunction with other technical indicators. The RVI compares closing price to price range and provides a reading of the strength of price movement up or down. Higher values for the RVI indicate increasing trend strength, while lower values indicate a lessening of momentum. As a momentum indicator, the slope of the RVI often changes direction ahead of price.
In a long-term uptrend, there are back-and-forth movements of price as it advances in the direction of the overall trend, retraces downward and then turns back to advance further in the direction of the existing trend. The RVI can be employed by a trader who, rather than using a buy-and-hold trend trading strategy, wants to maximize profits by moving in and out of buy positions in accord with peaks and retracements that occur within the trend. Other technical indicators are used to confirm trading signals given by the RVI.
The strategy is as follows:. Dictionary Term Of The Day. A conflict of interest inherent in any relationship where one party is expected to Broker Reviews Find the best broker for your trading or investing needs See Reviews.
Sophisticated content for financial advisors around investment strategies, industry trends, and advisor education. A celebration of the most influential advisors and their contributions to critical conversations on finance. Become a day trader. The strategy is as follows: Once the trader has a long position established in an overall uptrend, he or she monitors the RVI for bearish divergence from price.
Price makes a new high, but the RVI does not make a corresponding new high. Confirmation of an impending retracement is sought by using another technical indicator, the Relative Strength Index , or RSI. If the RSI indicates overbought conditions in the market by readings above 70, this is taken as a confirming signal of the RVI divergence indication.
The trader takes profit on half of his or her existing buy position. Assuming a retracement occurs, the trader looks to re-establish his or her full long position when the RVI shows a bullish divergence from price and the RSI indicates oversold conditions.
The trader continues taking half profits, then resumes a full long position while the overall uptrend remains intact, as determined by price remaining above the period moving average, or MA. On a close below the MA, the trader closes out his or her entire position. Understand the indications given by the relative vigor index, and learn how it can be used to implement a momentum-based Discover some of the best technical indicators that traders and analysts can employ to supplement the use of the relative Discover why traders and analysts use the Relative Vigor Index, or RVI, to measure the momentum of bull and bear movements Find out about a forex trading strategy that uses the RSI, and profit from retracements that occur when a market is overbought Learn some of the best additional technical indicators that can be used along with the relative strength index to anticipate Create a forex trading strategy designed to take advantage of the ability of the dynamic momentum index to give early signals Unfortunately, there is no perfect investment strategy that will guarantee success, but you can find the indicators and strategies that will work best for your position.
The Relative Strength Index comes in handy when identifying areas that are potentially overbought or oversold. Options traders have to pay attention to more indicators than your average stock trader does, including volatility, direction, and duration.
Traders can use "the usual suspects" standard indicators for trend trading when it comes to choosing indicators for investing in commodities. Comparing price swings helps traders gain insight into price momentum. Trending stocks that are presenting a buying opportunity on the current pullback.
Learn about the different traders and explore in detail the broader approach that looks to the past to predict the future. An indicator used in technical analysis that measures the conviction An indicator used in technical analysis that determines overbought A conflict of interest inherent in any relationship where one party is expected to act in another's best interests.
Passive investing is an investment strategy that limits buying and selling actions. Passive investors will purchase investments How much a fixed asset is worth at the end of its lease, or at the end of its useful life. If you lease a car for three years, A target hash is a number that a hashed block header must be less than or equal to in order for a new block to be awarded. Get Free Newsletters Newsletters.More...