How to Use RSI Indicator | Firstock (Complete Beginner-Friendly Guide)

If you’ve ever wondered how traders spot overbought or oversold stocks, chances are they’re using the RSI indicator. Whether you’re trading with Firstock, using a stock trading app, or exploring strategies on an option trading app, the RSI indicator can be your simple yet powerful compass.

Think of RSI like your car’s fuel gauge—it tells you when the market is running “too hot” or “too cold.” And knowing that can help you decide when to enter or exit a trade with confidence.

In this guide, you’ll learn how to use RSI indicator, what it is, how RSI buy and sell signals work, and how to make it part of your trading strategy—especially if you’re using trading apps for beginners.

Learn how to use RSI indicator, what is RSI indicator, RSI buy and sell signals using a stock trading app or option trading app. Perfect for trading apps for beginners.

 

What Is the RSI Indicator?

The Relative Strength Index (RSI) is a momentum indicator used in technical analysis. It measures how fast and how much a stock’s price has changed over a period—usually 14 days.

In simple words:
RSI helps you understand if a stock is overbought or oversold.

It moves between 0 and 100 and gives clear signals about potential trend reversals.

 

Why the RSI Indicator Matters for Traders

RSI matters because it tells you things that aren’t obvious from the price chart alone.

Here’s why traders rely on it:

  • It helps avoid buying expensive stocks.

  • It warns you before a big reversal happens.

  • It shows strong momentum in a trend.

  • It works well for beginners in trading apps.

If you want to trade smarter instead of guessing, the RSI indicator is a must-learn tool.

 

How the RSI Indicator Works (Simple Explanation)

RSI looks at the strength of recent price changes.

Think of it like a mood meter for the market:

  • When buyers push prices up quickly → RSI rises

  • When sellers dominate → RSI falls

It then converts this data into a reading between 0 and 100.

You don’t need complex formulas—your stock trading app or option trading app calculates it automatically.

 

How to Use RSI Indicator on Firstock

Using the RSI indicator on Firstock is simple:

  1. Open the Firstock app

  2. Choose a stock or index (NIFTY/BANKNIFTY)

  3. Tap Indicators

  4. Select RSI (Relative Strength Index)

  5. Keep the default period as 14

  6. Apply and view the RSI line below the chart

You will now see the RSI curve with levels at 30, 50, and 70.

 

Understanding RSI Levels: 30, 50, and 70

To use RSI effectively, you need to understand what each level means.

RSI Below 30 → Oversold Zone

This means buyers may soon step in.
Stocks are often undervalued here.

RSI Around 50 → Neutral Zone

No strong trend.
Useful for confirming direction.

RSI Above 70 → Overbought Zone

A correction may be coming.
Ideal for planning exits or short-selling.

 

RSI Indicator Buy and Sell Signals

Here are the most popular RSI buy and sell signals used by traders.

Buy Signals

  • RSI crosses above 30 → trend recovering

  • RSI bounces from 30 in strong stocks

  • RSI divergence (price falls, RSI rises)

Sell Signals

  • RSI crosses below 70 → trend weakening

  • RSI falls from 70 while price rises

  • Bearish divergence (price rises, RSI falls)

These signals work extremely well on all trading apps for beginners, including Firstock.

 

RSI Divergence: A Hidden Trading Secret

Divergence is when price and RSI move in opposite directions.

Bullish Divergence (Buy)

  • Price makes lower lows

  • RSI makes higher lows

This means selling pressure is weakening.

Bearish Divergence (Sell)

  • Price makes higher highs

  • RSI makes lower highs

This warns that buyers are losing strength.

Divergence can often predict a reversal before it happens.

 

Best RSI Settings for Beginners

Beginners should follow these settings:

  • RSI Period: 14

  • Overbought Level: 70

  • Oversold Level: 30

For intraday, you may also try:

  • RSI 9 for faster signals

  • RSI 21 for slower, more reliable signals

But start with RSI 14 for easier understanding.

 

RSI for Intraday Trading

Many day traders use the RSI indicator for:

  • Spotting quick reversals

  • Identifying strong momentum

  • Avoiding false breakouts

Best RSI Intraday Strategy:

  • Buy when RSI crosses above 30

  • Sell when RSI crosses below 70

Always confirm with volume or trendlines.

 

RSI for Swing Trading

RSI works beautifully for swing trading (2–10 days).

Swing Strategy:

  • Buy when RSI touches 30 and bounces

  • Sell when RSI touches 70 and reverses

  • Use RSI divergence for higher accuracy

This strategy works well on the Firstock stock trading app.

 

Using RSI in an Option Trading App

Options require precise timing—and RSI helps with that.

Use RSI to:

  • Decide when to buy Call options (low RSI)

  • Decide when to buy Put options (high RSI)

  • Avoid entering trades in neutral zones

Example:
RSI = 25 → Strong candidate for Call buying
RSI = 80 → Strong candidate for Put buying

Combine with support/resistance for better accuracy.

 

Using RSI in a Stock Trading App

Most stock trading apps display RSI clearly.

You can use it to:

  • Time your buying at discounted levels

  • Avoid overbought stocks

  • Confirm trend strength

  • Identify reversal zones

This is especially useful for trading apps for beginners as it simplifies decision-making.

 

Combining RSI with Other Indicators

RSI becomes more powerful when combined with other tools.

Best combinations:

  • RSI + Moving Average

  • RSI + MACD

  • RSI + Support/Resistance

  • RSI + Trendlines

Example:
If RSI is oversold AND price hits a support zone → strong buy setup.

 

Common Mistakes to Avoid When Using RSI

Beginners often misunderstand RSI. Avoid these mistakes:

  1. Buying just because RSI is below 30
    (Always wait for a bounce.)

  2. Selling blindly at RSI above 70

  3. Using RSI alone without confirmation

  4. Using multiple RSI settings on the same chart

  5. Assuming RSI works the same in all stocks

Remember: RSI signals are stronger in trending markets.

 

Final Tips for Using the RSI Indicator Effectively

If you’re using Firstock, a stock trading app, or an option trading app, follow these tips:

  • Always wait for a confirmation candle

  • Combine RSI with a trendline for accuracy

  • Avoid over-trading based on RSI

  • Use RSI divergence to catch early reversals

  • Start with higher timeframes and move down

RSI is simple—but powerful when used correctly.

 

Conclusion

The RSI indicator is one of the most beginner-friendly yet advanced tools you can use in the world of trading. Whether you're on Firstock, using a stock trading app, or exploring strategies on an option trading app, knowing how to use RSI indicator can completely change the way you approach the market.

It’s like having a market “emotion detector”—telling you when things are overheated or undervalued. Use it wisely, combine it with other indicators, and you’ll make smarter, more confident trading decisions.

 

FAQs

1. What is the RSI indicator used for?

RSI is used to identify whether a stock is overbought or oversold, helping traders time entry and exit points.

2. What are RSI buy and sell signals?

Buy when RSI moves above 30; sell when RSI drops below 70. Divergence also provides signals.

3. What is the best RSI setting for beginners?

The standard RSI 14 setting is best for most traders.

4. Can I use RSI on a stock trading app?

Yes! Almost every stock trading app, including Firstock, displays RSI by default.

5. Is RSI good for option trading?

Yes, RSI helps time entries for buying Call or Put options, especially during reversals.