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. Tapeline's similarly named check, strength vs the market (relative strength), is a completely different measurement: it compares a ticker's price change to a broad-market benchmark's over the same period.
Related
See this in the product
Relative strength, the other meaning · How Tapeline scores stocks
Related terms
Back to the full glossary.
General information about market vocabulary, written to be descriptive rather than prescriptive. Not investment advice — see the risk disclosure.