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THE MARKET WHISPERER 21 3

The Relative Strength Index – RSI

The Relative Strength Index is an oscillator that measures the force of
any stock’s acceleration, rather than comparing two or more stocks, as
“relative” may possibly appear to indicate. It does this by checking the
average of changes occurring in closing prices over a specific timeframe.
The indicator was developed during the 1970s by Welles Wilder, and is
meant to assist in identifying the overbought and oversold points.

Any oscillator you display on your charts will need to be defined to
retroactively check a predetermined period. The normally accepted
timeframe for the RSI is fourteen days for swing traders. Some traders
define it for shorter terms of nine days, and others for even longer periods
such as twenty-five days.
• The shorter the predetermined period, the more sensitive, or fast, the

oscillator is, and the greater the possibility of multiple false signals.
• The longer the predetermined period, the less sensitive, or slow, the

oscillator becomes, but then there is a higher possibility that you will
get the buy and sell signals after the move has begun.

Sample of RSI Oscillator Feed in My Screening Software