Glossary / Trend & momentum

RSI (relative strength index)

Also called: relative strength index

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. Despite the name it has nothing to do with relative strength against a benchmark — it compares a security only to its own recent history.

How it is measured

How is RSI measured?

Over a rolling window of sessions, average the size of the sessions that closed up and average the size of the sessions that closed down. The ratio of those two averages is mapped onto a 0-100 scale. Readings near the top of the scale mean recent up sessions have been larger than recent down sessions; readings near the bottom mean the reverse.

Why it matters

Why does RSI matter to a swing trader?

The scale is bounded, which is the useful part: unlike price it cannot run away, so it puts very different securities on comparable footing. The common trap is treating a reading near either end as a turning point — a security in a sustained move can hold an extreme reading for weeks, because the oscillator is describing the character of the move rather than its remaining length.

In Tapeline

Does Tapeline use RSI?

Not an input to any Tapeline factor. The similarly-named Relative Strength factor is a completely different measurement: it compares a ticker's price change to a broad-market benchmark's over the same period.

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

Relative strength, the other meaning · Full methodology

Related terms

Relative strength
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.
MACD
MACD is an indicator built from the difference between two exponential moving averages of price.
Rate of change
Rate of change is the percentage difference between the current price and the price a fixed number of sessions ago.
Volatility
Volatility measures how much a security's price varies around its own average over a period.

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