Relative Strength Index (RSI) trading indicator Forex

Relative Strength Index (RSI) trading indicator - one of the most popular momentum price trading indicators. The name of Relative Strength Index (RSI) less similar with it's content: Relative Strength Index (RSI) trading indicator at all is not bound with Relative Strength method, based on compare prices one financial symbols and others. Relative Strength Index (RSI) trading indicator was developed by J. Wilder - jun. and released in his book in 1978 (Trend Research, POBox 128, McLeansville, NC 27301).

The Relative Strength Index (RSI) trading indicator formula is:

RSI = 100 - 100/(1 + RS)

here:

RS - relation exponential moving average of price increase in n periods to absolute value of exponential moving average of price decrease in n periods.

The base of Relative Strength Index (RSI) trading indicator is define speed of price change. Relative Strength Index (RSI) trading indicator's value depend on close price changes.

Wilder index is trading indicator of price speed where last data has most weight and for its calculation needs one symbol quotes only. Relative Strength Index (RSI) trading indicator's interpretation is carried out in correspondence to standard price movement indicator's interpretation: Wilder call especially attention to divergences and convergences Relative Strength Index (RSI) trading indicator with price.

Relative Strength Index (RSI) trading indicator's calculate method, considered exponential moving average using, allows avoid problems which are bounded with random indicator moves, which appears when old data leaves Relative Strength Index (RSI) trading indicator's calculation. This problem is powerfully obstructs working with such indicators like short simple moving averages, rate of change and stochastic oscillator. It's obviously than lower n that more short period and Relative Strength Index (RSI) trading indicator more sensitive. Than more n that more long period and Relative Strength Index (RSI) trading indicator is less sensitive. Wilder say that 14 is more optimum period for Relative Strength Index (RSI) trading indicator.

Relative Strength Index (RSI) trading indicator can be applied to any timeframe, from minutes to months.

The Relative Strength Index (RSI) trading indicator's calculating method is limits its values from 0 to 100. But in ditto time relative using bring about volatility and "noising" of indicator. With this view the bests characteristics at smoothed indicators, which not depends on relatives.

Copyright 2007 Gordago. All rights reserved.
Copying of all making parts of a site in any form without the permission of holders of copyrights is forbidden.
Gordago
Search
Advertising
EnglishEnglish RussianRussian