Stock Market Glossary
RSI
Relative Strength Index – Momentum oscillator from 0 to 100.
In brief: Relative Strength Index – Momentum oscillator from 0 to 100.
Meaning in practice
Values above 70 are traditionally considered overbought, and values below 30 are considered oversold. The RSI is particularly suitable in sideways phases; In strong trends it often produces counter signals too early.
Context for investors and traders
For traders, this term is most useful when preparing and executing an order. Its meaning depends on the venue, liquidity, time frame and order type. A single reading is not a reliable buy or sell decision.
How to use this in practice
In practice, the term should be linked to a specific trading plan: entry, exit, position size and costs belong together. In short time frames, spread, slippage and delayed execution can quickly outweigh the theoretical benefit of an observation.
What to keep in mind
Write down which observation confirms or invalidates your assumption before trading. This keeps the term a decision-making tool rather than a retrospective justification for risk already taken.
