Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. Before deciding to trade foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. You could sustain a loss of some or all of your initial investment and should not invest money that you cannot afford to lose. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage.

RSI definition

RSI has a particular significance in relation to IG's platform. Here, we define RSI in general investing and explain what it means to you when trading with IG.

RSI stands for the relative strength index. It is a key tool used in technical analysis, assessing the momentum of assets to gauge whether they are in overbought or oversold territory.

To calculate RSI, follow this equation:

RSI = 100 – 100/(1+(average up closes/average down closes))

The RSI calculation gives a figure between 0-100. Most analysts believe that an asset at around the 70 level is in overbought territory and may be in for a correction, while an asset at or near 30 is oversold and may be in for a rally.

RSI example calculation

Let’s say that over the past month, Amazon has finished up an average of 5 pips and down an average of 10. Divide 5/10 to make 0.5, then add one to make 1.5. Divide 100 by that number to make 66.66, then minus that from 100.

In this example, the current RSI of Amazon is 33.34.

With IG

RSI is one of the technical indicators available on our charts. To see RSI, click the ‘technical’ tab on the chart and scroll across to RSI. 

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