RSI Calculation Using Smoothed Gains and Price Changes

Summary

This note presents a relative strength index calculation based on closing-price changes. It separates each change into its positive component and its absolute magnitude, then applies a smoothed moving average to each series. The ratio is transformed onto a bounded scale to produce short- and longer-period RSI readings.

The indicator takes the close series and two period parameters. The document provides the calculation outline but refers elsewhere for an explanation of how to interpret the readings. It gives no market examples, signal thresholds, backtest, or performance evidence, so it describes construction rather than a tested trading rule. The exact smoothing convention and parameter choices would need clarification before reproducing the indicator across platforms.

Key ideas

• The calculation uses closing-price changes as its input.
• Positive changes are smoothed relative to smoothed absolute changes.
• Two period settings produce separate short- and longer-period readings.
• The note defines the calculation but does not explain signal interpretation or report test results.

Tags

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