Wednesday, February 8, 2023

Normalized RSI

Theory :

RSI (Relative Strength Index) is already normalized. Hence, making a normalized RSI seems like a nonsense … if it was not for the “flattening” property of RSI. The RSI tends to be flatter and flatter as we increase the calculating period – to the extent that it becomes unusable for levels trading if we increase calculating periods anywhere over the broadly recommended period 8 for RSI. In order to make that (calculating period) have less impact to significant levels usage of RSI trading style in this version a sort of a “raw stochastic” (min/max) normalization is applied

Usage :

As any other RSI – with an exception that it is more responsive to the fixed levels usage


The “big picture” example comparing the normalized RSI (upper, colored line) and regular RSI (lower gray line), bot using same parameters and period 32