Glossary / Relative performance

Relative strength

Also called: RS · relative performance

Relative strength is a difference, not a standalone reading: a security's price change over a period, minus a benchmark's price change over exactly the same period. It answers whether a security moved by more or less than the market it trades in.

How it is measured

How is relative strength measured?

Take the security's percentage change over a chosen horizon. Take the benchmark's percentage change over that identical horizon. Subtract the second from the first. Running the calculation across several horizons — a quarter, half a year, a year — and combining them keeps a single noisy quarter from dominating the result.

Why it matters

Why does relative strength matter to a swing trader?

Because it is a difference between two numbers that can both be negative, the reading separates a security's own behaviour from the market's. A security can read well above the midpoint over a period in which its price fell, because the benchmark fell further. For a swing trader that distinction is the point: it identifies which securities are moving on something specific to them rather than on the whole market moving together.

In Tapeline

Does Tapeline use relative strength?

Relative Strength is the second-heaviest factor in the Tapeline composite, after Trend. It measures the ticker's change minus a broad-market benchmark's change across three horizons. It is not sector-adjusted.

Read what the Relative Strengthfactor measures →

Tapeline publishes the six factor names and the ordering of their weights. The numeric weights, the scoring equation and the band edges are not published.

Related

See this in the product

What the Relative Strength factor measures · The Relative Strength factor · Full methodology

Related terms

Alpha
Alpha is the part of a return that is not explained by the benchmark's move over the same period — the difference between what a holding did and what its benchmark did while it was held.
Beta
Beta measures how much a security's price has historically moved for a given move in its benchmark.
RSI
RSI is an oscillator that compares the average size of a security's up sessions to the average size of its down sessions over a recent window, expressed on a 0-100 scale.
Sector rotation
Sector rotation describes a shift in which parts of the market are moving most, as capital concentrates in some sectors and thins out of others over weeks or months.

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General information about market vocabulary, written to be descriptive rather than prescriptive. Not investment advice — see the risk disclosure.