Using StochRSI for Trading Equities
StockRSI is the using of Stochastics method for finding the relative value of RSI (Relative Strength Index). It was developed by Tushard Chande and Stanley Kroll, and is best used for finding trading opportunities between over-brought and over-sold positions of RSI. The idea behind StockRSI is simple and has produced some good results. StockRSI for RSI value is defined by the below formula,
StockRSI = (Actual RSI – Lowest RSI) / (Highest RSI – Lowest RSI)
All values are for a specific period, usually 14 days. The StockRSI value ranges from 0 to 1, Zero when the RSI touches new lowest point for the period and One when RSI touches new highest point. 0.2 is defined as the oversold value and 0.8 is as overbrought value. A crossover of 0.5 is taken as the conformation of a trend. Buy signal is constituted when positive divergence occurs above 0.2, and a sell signal is constituted when negative divergence occurs below 0.8. Failed signals occur when values move back below and above oversold and overbrought values respectively.
Although StockRSI can be utilized as market indicator, it offers better results when combined with other technical indicators. Remember, StockRSI is the indicator of a indicator and uses predicted data, it can generate many false signals.
StockRSI = (Actual RSI – Lowest RSI) / (Highest RSI – Lowest RSI)
All values are for a specific period, usually 14 days. The StockRSI value ranges from 0 to 1, Zero when the RSI touches new lowest point for the period and One when RSI touches new highest point. 0.2 is defined as the oversold value and 0.8 is as overbrought value. A crossover of 0.5 is taken as the conformation of a trend. Buy signal is constituted when positive divergence occurs above 0.2, and a sell signal is constituted when negative divergence occurs below 0.8. Failed signals occur when values move back below and above oversold and overbrought values respectively.
Although StockRSI can be utilized as market indicator, it offers better results when combined with other technical indicators. Remember, StockRSI is the indicator of a indicator and uses predicted data, it can generate many false signals.
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posted by Daniel Pipitone at
3:55 AM
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