2006-07-11 05:08:57 · 5 answers · asked by jeff81_design 1 in Business & Finance ➔ Investing
what does your RSI stand for? i didn't see anything for math, cept an accounting information thing.
2006-07-11 05:11:41 · answer #1 · answered by Anonymous · 1⤊ 0⤋
I ran into this same problem several years ago, and it took me months to come up with the formula. I finally had to buy the book, for $140 by J. Welles Wilder. It was well worth it, because RSI is the best Momentum Indicator out there. The Momentum Wars rage out there, but to me, RSI is it. You don't need 3 or 4 or 10 momentum indicators, because they all measure the same thing, and you will just get confused. So, you've made a good choice.
The Relative Strength Index, by Wilder, was first published back in the Eighties, so you would think the formula would be widely available. And it is incorporated into most trading software. I will try to dig it out from my old notes, but you may have to get back to me at "dredude52@yahoo.com"
The name, Relative Strength Index, is slightly misleading. RSI does not compare the relative strength of two securities (like the more common Relative Strength comparison does, by dividing one price by the other), but the strength of one security, or index or whatever, to itself.
RSI has a unique property if you leave it with a 14-period setup, and use it for daily and weekly charts as it was intended. You're on your own with the intraday stuff.
If you look at most books or websites, they will tell you that RSI tops above 70 and bottoms below 30. This is very wrong. It depends on whether you are in a Bear Market or a Bull Market. You'll find that in a Bull Market, RSI will rarely touch 30, so you must re-adjust the scale for the market bias; 40 is probably a good number. In a Bear Market, RSI rarely reaches 70, only about 65.
This re-scaling is something Wilder missed, and is not in his book, so you are one-up on most people.
Look at using 40-80 or 90 in Bull Markets for the Stock Market and Currencies.
Try using 20-30 and 60-65 for the range in Bear Markets.
Similarly, you will find as much misinformation about Lane's Stochastics. I gave up on it years before I knew the correct input numbers and method.
My advice: before you use an indicator for investing decisions, always investigate the source of the information first. Find out how it was intended to be used before all of the "experts" got ahold of it. Buy the book. There are other great ideas and indicators in the book also.
Oh, and by the way, now you know also not to listen to an Economist or Phd in finance about trading.
2006-07-11 12:34:45 · answer #2 · answered by dredude52 6 · 0⤊ 0⤋
I have a PhD in Finance from Berkeley. I have no idea what you mean by "RSI."
If I did -- I might be able to tell you how to calculate it.
2006-07-11 12:20:52 · answer #3 · answered by Ranto 7 · 0⤊ 0⤋
the answer is 11.
2006-07-11 12:11:24 · answer #4 · answered by midi_junkie 3 · 0⤊ 0⤋
what is RSI?
2006-07-11 12:12:17 · answer #5 · answered by Anonymous · 0⤊ 0⤋