Rescaling Long-Period RSI to Reduce Indicator Flattening

Summary

The document discusses a limitation of the Relative Strength Index: as its calculation period grows, the series can become flatter and less useful for analysis. It says RSI is commonly treated as already normalized because it stays within a bounded range, but argues that this does not prevent flattening at longer lookback lengths. The text compares this issue with smoothing and an inverse Fisher transform, which it says do not fully solve the problem over time.

It then presents a normalized version of a long-period RSI, rescaled to a range from negative fifty to positive fifty, and claims that this removes the observed flattening. However, the document does not provide the transformation formula, chart data, test results, or evidence that the rescaled indicator improves trading decisions. It advises experimentation, leaving parameter selection and validation to the reader. The proposal is therefore an indicator idea with an asserted visual benefit, not a documented trading strategy or demonstrated source of predictive edge.

Key ideas

• The author says RSI becomes flatter as its calculation period increases.
• Smoothing and an inverse Fisher transform are described as incomplete remedies.
• The proposed alternative rescales a long-period RSI to a negative-fifty to positive-fifty range.
• The document claims the rescaling reduces flattening but supplies no formula or validation results.
• Experimentation is advised, and trading usefulness remains unproven.

Tags

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