RSI - Relative Strength Index (Wilder) & RMI - Relative Momentum Index

Quote from 1a2b3cppp:
Take something like RSI, which has overbought and oversold levels, and watch how when price is in a sustained uptrend, it keeps going up even though RSI says overbought. Of course, you had no way of knowing beforehand that price was going to be in a long uptrend. RSI just tells you what price is doing relative to what it was doing before, and then someone decided "ok, above here is overbought and below here is oversold.' Those levels have nothing to do with anything. RSI just tells you what price is doing now relative to what it was doing before. [/B]
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Although I understand what you're saying, I never learned that just because the RSIW or the RMI reached a certain level, it meant a reversal. When I learned about it, they said the levels can stay above or below for as long as it takes. The use of the RSIW and the RMI are strictly for confirming the actual reversal, not predicting when the reversal will happen.

On a side note, both indicators seem to carry more weight on longer time periods. Using them for daytrading is nothing more than gambling. However, I've yet to see them hinder my decisions. It's just an indicator, not a be all, end all guru of all things monetary. :D

Thanks for the comments.
 
Quote from endgame:

When I learned about it, they said the levels can stay above or below for as long as it takes. The use of the RSIW and the RMI are strictly for confirming the actual reversal, not predicting when the reversal will happen.
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How does it confirm the reversal?

It can tell you "a reversal just happened" but you can tell that from looking at price, too.

When it confirms the reversal does that mean price is more likely to keep going in the new direction?
 
Quote from endgame:

Thanks for the responses. Any thoughts you might have as they pertain the RSIW or the RMI, please forward them.
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A 14-period Wilder moving average is equivalent to a 27-period exponential moving average. When RSIW is close to 50, price is close to the 27-period EMA. When RSIW is zero, price is infinitely below this EMA. When RSIW is 100, price is infinitely above this EMA. You may like to play with "Reverse Engineering RSI" as well.

True Strength Index ( TSI ) is a variant of RSI. Handle123 has mentioned this indicator several times. You may like to read through some of his posts.

Feel free to try something crazy. You may discover some interesting features, that have never been mentioned in any books, chat rooms, etc.

Just some crazy ideas.:p
 
Quote from endgame:

Sorry if this is a repeat topic. I tried the search function with no results.

I've been using the RSI Wilder for some time, and I consider it one of the most useful studies yet, but recently, I've come across the RMI which smooths out the waves quite nicely. I leave the overbought and oversold values at 25 and 75, but I have the RSIW length at 14 and the RMI at 20 days.

Does anyone have any experience with these who may have other tricks involving these studies?
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EndGame.

I am a Stone Age tool (indicator) designer (named Flintstone). Since 1996 I have been designing my own indicators and strategies in TS. They work reasonably well for my trading methods (swing trading, position trading and intermediate term trading). Being a steady Eddie in using indicators and market data to manage my 401K got me retired 7 years ahead of time.

During retirement my programming skills I learned in IT came in handy to design indicators. The objective I used was build indicators that act as the initial signal in a set up. Then price pattern has to occur with the signal in order to execute actual trades.

My indicators act different than conventional ones because I experimented heavily with code changes. For example I would take the RSI frame work but replace all moving averages with Zero Lag M.A.s. Then I built the RSI into a strategy with price patterns and tested them against securities and indexes in different time frames. It took a while but these Stone Age modified tools now work well with many price set ups I designed.

So is the indicator king? Nope not even close. Price is king. But indicators can provide the look back necessary to signal when price may be ripe for picking.
 
Have you looked at divergence trading with the RSI? Or any of these types of indicators for that matter?

Indicators are just for entries. Whether you make money or not will depend on your money management.
 
Trying to find a suitable indicator is too frustrating to lead anywhere near success. The best approach is to use some kind of AI to find it for you or to find a system to trade. There are programs like stratasearch, price action lab, adaptrade and a few others others that will find systems and test them in out of sample so you can do the job a thousand to a million times faster than those who seek the perfect indicator by trial and error. One indicator cannot perform well under all possible market conditions not even under 5% of all possible conditions.
 
Quote from HurricaneUS:

Probability Distribution Function?



"Inferring Trading Strategies From Probability Distribution Functions"

http://www.traderplanet.com/article...gies-from-probability-distribution-functions/
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Smoothed RSI Inverse Fisher Transform was presented by Sylvain Vervoort in the October 2010 issue of Stocks & Commodities magazine. The article was awarded with the Reader's Choice award in 2011.

http://blog.traderslibrary.com/sylv...isher-transform-excerpt-from-sc-magazine.html
 
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