Wednesday, February 8, 2023
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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

PS:

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