I happened to see many beginners asking how to use RSI, so I’ll share my own observations.

Actually, the RSI indicator looks complicated, but the core logic is super simple—it's a measure of the strength of upward or downward momentum over a period, using values from 0 to 100. The closer the value is to 100, the more bullish the momentum; the closer to 0, the stronger the bearish momentum. Many people focus on the 70 and 30 lines, with above 70 called overbought and below 30 called oversold. Theoretically, these zones suggest the market may be overreacting and could be due for a pullback.

But I have to be honest—trading directly based on overbought and oversold zones can be quite risky. I’ve seen too many people rush to short when RSI breaks above 70, only to get trapped, because during strong rallies, RSI often stays at 80 or even 90 for a long time. So choosing the right RSI parameters makes a big difference in trading experience.

Regarding parameters, the default RSI 14 is probably the most common, suitable for medium-term observations like 4-hour or daily charts. But if you're a short-term trader, try RSI 6—you’ll find signals come faster, and the indicator reacts immediately to price movements. The advantage is timeliness; the downside is more false signals. For longer-term, RSI 24 can help filter out noise, making it more stable but with fewer signals. Honestly, there’s no absolute best RSI setting; it depends on your trading style. I personally adjust based on the timeframe—short-term at 6, medium-term at 14, and weekly charts or above at 24.

Besides overbought and oversold, divergence is a signal I pay more attention to. When the price makes a new high but RSI doesn’t follow suit, or the price hits a new low but RSI doesn’t, that’s divergence. Bearish divergence usually hints at weakening upward momentum, while bullish divergence may signal a rebound. But divergence isn’t an absolute signal; I usually combine it with trendlines or candlestick patterns for better judgment.

In actual trading, I’ve noticed a common mistake—many people look at only one timeframe. For example, seeing oversold on a 15-minute chart and wanting to enter, but ignoring that the daily RSI has already fallen below 50 and is weakening. The small timeframe signal gets suppressed by the larger timeframe trend, leading to losses. So, when using RSI, it’s crucial to consider multiple timeframes.

Ultimately, RSI is just a tool to help you judge whether the market is overreacting and whether momentum is keeping pace with price. It’s not a holy grail. My current approach is to combine RSI with MACD, moving averages, and candlestick patterns to improve the win rate. For beginners, don’t rely too heavily on a single indicator. Once you find the RSI parameters that suit you, combine it with other technical tools—that’s the right way to go.