Using RSI Skewness to Distinguish Trends from Flat Markets

Summary

This note introduces an indicator based on asymmetry, defined as the third central moment standardized by the cube of the standard deviation. Because price quote variability can make direct calculation unstable or too small, the approach applies the statistic to RSI values instead. The resulting measure is presented as a trend indicator: elevated readings are associated with the start of a new trend, while low readings suggest a flat market.

The description gives the conceptual construction and interpretation, and notes that the indicator was implemented in MQL4 and published in 2011. It provides no parameter details, formula for translating RSI observations into trading decisions, chart evidence, or performance results. The trend interpretation should therefore be treated as a proposed signal characteristic rather than validated predictive evidence; the note does not specify markets or conditions where it works best.

Key ideas

• The indicator measures distributional asymmetry using a standardized third central moment.
• It applies the asymmetry calculation to RSI because price quote variation may be too small for direct use.
• High readings are described as signaling a possible new trend, while low readings indicate flat conditions.
• The note reports no tests or trading rules that establish the indicator's predictive value.

Tags

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