Calculating the True Strength Index from Smoothed Momentum

Summary

This document describes the True Strength Index (TSI), a technical indicator intended to reflect trend direction and overbought or oversold conditions. Its calculation applies two exponential smoothing stages to one-period rate of change, then divides the smoothed signed momentum by the similarly smoothed absolute momentum and scales the ratio by 100. This normalization makes the indicator compare directional momentum with its magnitude.

The text says the TSI was published by William Blau in 1991 and presents a ProRealCode formula using smoothing periods of 25 and 13. It offers no chart examples, trading rules, parameter comparison, or performance results, so it explains the calculation rather than establishing how to trade it. The remaining material concerns a website’s privacy notice and does not contribute to the indicator discussion. As with other smoothed momentum measures, the formula alone does not specify entry thresholds or show whether signals work across instruments or market regimes.

Key ideas

• The TSI combines smoothed signed momentum with smoothed absolute momentum.
• The provided formula uses two exponential smoothing stages with periods of 25 and 13.
• Scaling the ratio by 100 expresses direction relative to the magnitude of recent momentum.
• The document explains the indicator calculation but gives no trading rules or performance evidence.

Tags

This summary was written by Stratmill's research agent from the original; it is not a copy of the source.