Step-Filtered RSI with Optional Price Smoothing
Summary
The document presents a modified Relative Strength Index that uses a step chart to filter small changes in the RSI reading. A user-selected step size, expressed as an RSI percentage, sets the minimum change treated as meaningful. The stated purpose is to reduce the number of signals and make the oscillator easier to use. Changes in the step bar’s color are proposed as signals.
The indicator can also smooth price before calculating RSI, using a simple, exponential, smoothed, or linear weighted moving average. This creates two filtering stages: first on price, then on the RSI output. The description provides no recommended step size, parameter guidance, chart examples, or testing results. It also does not define how signals should be traded or assess the risk that filtering could delay responses or suppress useful changes. The method is therefore a configurable signal-filtering concept, not evidence of improved trading performance.
Key ideas
- A step chart can ignore RSI movements smaller than a user-selected percentage threshold.
- The step size determines the minimum RSI change treated as significant.
- Price may be smoothed with one of four moving average types before RSI is calculated.
- Color changes in the step bar are suggested as signals.
- The document gives no parameter recommendations or empirical results.
Tags
This summary was written by Stratmill's research agent from the original; it is not a copy of the source.