Tag: relative strength index

Can The Relative Strength Index (RSI) Improve Your Trading?

Posted on by The INO.com Team

Today's video is on the Relative Strength Index (RSI). This widely-used momentum oscillator measures the strength and speed of a market's price movement by comparing the current price of the security against its past performance. Developed by J. Welles Wilder in the 1970s, the RSI can be used to identify overbought and oversold areas, support and resistance levels, and potential entry and exit signals.

The RSI indicator is shown on a scale of 0 to 100, with levels marked at 70 and 30, and a midline at 50. Wilder recommended a calculation based on a 14 day period, but this can be adjusted to change the sensitivity of the indicator.

Learn more here

Traders Toolbox: Relative Strength Index Revisited...

Posted on by lindsay

Trader's Toolbox

At MarketClub our mission is to help you become a better trader. Our passion is creating superior trading tools to help you achieve your goals -- no matter which way the markets move -- with objective and unbiased recommendations not available from brokers.

The Trader's Toolbox posts are just another free resource from MarketClub.

---

"MarketClub is known for our “Trade Triangle” technology. However, if you have used other technical analysis indicators previously, you can use a combination of the studies and other techniques in conjunction with the “Trade Triangles” to further confirm trends.Developed by Welles Wilder, the Relative Strength Index (RSI) addresses the two major flaws of momentum – the need to have a constant band against which to compare price movement and the ability to smooth the ebb and flow of price movement.

Sharp up or down movement 10 days ago (in the case of a 10-day momentum line) can cause pronounced shifts in the momentum line even if the current prices are relatively stable, giving false signals. Also, different commodities may have different “overbought” and “oversold” levels. RSI corrects these concerns by smoothing the movement and by creating a constant range from 0 to 100...."

Revisit the Trader's Toolbox Post: "Relative Strength Index" here.

"Saturday Seminars" - Finding, Averaging & Forecasting Cycles in the Stock and Commodities Markets

Posted on by lindsay

Stan teaches you how to recognize, manage and make profitable use of cyclical movements in the markets. He shows you how cycles work with various formations. During his presentation, Stan integrates cycles with several common tools and technical studies such as the Relative Strength Index and Stochastics. The information derived from cycle studies gives the user an important factor to insert into the formulas in order to make the studies more sensitive and responsive. All stock, futures and cash traders will benefit from Stan’s presentation. His workshop will provide you with a greater understanding of cycles as useful timing tools.

PDF Workbook

Stan EhrlichStan Ehrlich graduated from Southern Illinois University in 1971 and joined Conti Commodities Services in the fall of that year. After trading for a few years, Stan invented the Ehrlich Cycle Finder, a physical, accordion-like device used to find cycle activity in any chart. The oldest mechanical technical analysis tool in the futures industry, the Ehrlich Cycle Finder can be used on all kinds of markets worldwide. Often quoted in publications such as Bond Week, Successful Farming Magazine, Crane Chicago Business Weekly, Futures magazine, and Stocks and Commodities magazine, Stan has also made numerous appearances on television and radio. Several technical analysis texts mention or detail the Ehrlich Cycle Finder. Stan has taught at dozens of investment seminars around the world, including several real-time trading seminars. In the past, Stan has worked with such well-known investment personalities as Jake Bernstein, Robert Prechter, and Robert Saperstein. Stan currently faxes a timely technical analysis market letter to his clients every few days.

---

Saturday Seminars are just a taste of the power of INO TV. The web's only online video and audio library for trading education. So watch four videos in our free version of INO TV click here.

INO TV

Traders Toolbox: Relative Strength Index (RSI)

Posted on by lindsay

MarketClub is known for our "Trade Triangle" technology. However, if you have used other technical analysis indicators previously, you can use a combination of the studies and other techniques in conjunction with the "Trade Triangles" to further confirm trends.

Developed by Welles Wilder, the Relative Strength Index (RSI) addresses the two major flaws of momentum – the need to have a constant band against which to compare price movement and the ability to smooth the ebb and flow of price movement.

Sharp up or down movement 10 days ago (in the case of a 10-day momentum line) can cause pronounced shifts in the momentum line even if the current prices are relatively stable, giving false signals. Also, different commodities may have different “overbought” and “oversold” levels. RSI corrects these concerns by smoothing the movement and by creating a constant range from 0 to 100.

The formula for calculating RSI is as follows: RSI= 100-[100/(1+RS)] where RS= average of the days closing higher during the interval divided by the average of the days closing lower during the interval.

The RSI indicator is plotted on a vertical scale of 0 to 100. The general rule of thumb is overbought levels are at 70% and oversold levels are at 30%. When the reading of the indicator surpasses 70, an overbought conditions exists. An oversold condition exists with readings below 30.

Similar to momentum, a trader should look for bullish and bearish divergences to occur when trading with RSI. A 14-day interval is commonly used, but personal fine-tuning and experimentation always is needed.

---

You can learn more about the Relative Strength Index by visiting INO TV.