Corrected RSX: Smoothing RSI Signals to Reduce Whipsaws

Summary

The document presents a Relative Strength Quality Index, or RSX, as a smoothed alternative to a jagged RSI, alongside a corrected line calculated from the RSX values. It suggests using the corrected line to filter RSX whipsaws or treating its crossing of the dotted RSX line as a potential trigger. The supplied indicator uses a 14-period setting by default and plots both the RSX and corrected series, with color reflecting the corrected line’s direction.

The correction adapts its update weight using recent variation in the RSX and its distance from the prior corrected value. The document’s rationale is that smoother values may avoid some premature trades caused by RSI fluctuations, but it offers no test results, comparison, or trading rules for entries, exits, and risk. The indicator is therefore a signal-processing idea to evaluate on suitable data, not evidence that the resulting trades will be profitable or that whipsaws will be eliminated.

Key ideas

• RSX is presented as a smoothed RSI intended to reduce jagged fluctuations.
• A corrected line adapts its update to recent RSX variation and distance from its prior value.
• The corrected line can be used as a filter or as a signal when it crosses RSX.
• The example uses a default period of 14 and displays both indicator lines.
• No empirical comparison or complete trading and risk rules are supplied.

Tags

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