The strength index was first used in futures trading. Later, in many chart technical analysis, it was found that the theory and practice of intensity index were extremely suitable for short-term investment in the stock market, so it was used to measure and analyze the stock price rise and fall. Foreign exchange trading is similar to futures trading and stock trading in that the rise and fall of exchange rate ultimately depends on the relationship between supply and demand. Therefore, the strength index is also widely used to analyze the foreign exchange market. Later, investors also made the calculation formula of RSI into a computer program, and the operator can get the value of RSI by inputting the exchange rate data into the computer every day. At present, both the chart analysis of Reuters and the chart analysis of Deli Finance can extract the trend chart of RSI. [2]
The principle of folding and editing this paragraph
The principle of RSI is simply to calculate the strength of buyers and sellers through numerical calculation. For example, there are 100 people facing a commodity. If more than 50 people want to buy and compete to raise prices, the price of goods will definitely rise. On the contrary, if more than 50 people compete to sell, the price will naturally fall.
According to the strength index theory, any sharp rise or fall of the market price is between 0- 100. According to the normal distribution, it is considered that RSI values are mostly between 30 and 70. Usually, the market is considered overbought at 80 or even 90, and the market price will naturally fall back and adjust. When the price falls below 30, it is considered oversold and the market price will rebound.
Fold and edit the relevant calculations in this paragraph.
RSI 1 is generally a 6-day relative strength indicator.
RSI2 is generally the relative strength index of 12 day.
RSI3 is generally a 24-day relative strength indicator.
The calculation formula of strength index is as follows:
RSI= 100×RS/( 1+RS) or, RSI =100-100 ÷ (1+RS).
Rs = daily average rising point /x daily average falling index.
Where RS =/kloc-the average value of the sum of four-day closing price rises//kloc-the average value of the sum of four-day closing price falls.
Formula simplification: RSI= 100× 14 average of the sum of closing price rises ÷( 14 average of the sum of closing price rises+14 average of the sum of closing price falls).
For example:
If the fluctuation of 14 in recent days is:
2 yuan rose on the first day, 2 yuan fell on the second day, and 3 yuan rose on the third to fifth day; On the sixth day, 4 yuan fell to 2 yuan on the seventh day and 5 yuan on the eighth day; It fell to 6 yuan on the ninth day and rose by 1 yuan on the tenth to twelfth day; 13- 14, fell by 3 yuan.
Then, the steps of calculating RSI are as follows:
(1) Add up the increase of 14 days and divide by 14. In the above example, the total * * * rise 16 yuan is divided by 14 to get 1. 143 (accurate to three decimal places);
(2) Add up the falling times of 14 days and divide by 14. In the above example, the total * * * falling 23 yuan is divided by 14 to get 1.643 (accurate to three decimal places);
(3) Calculate the relative strength RS, that is, RS =1.143/1.643 = 0.696 (accurate to three decimal places);
(4) 1+RS = 1+0.696 = 1.696；
(5) Divide 1+RS by 100, that is,100/1.696 = 58.962;
(6) 100-58.962=4 1.038.
Results The intensity index of 14 days was 4 1.
The RSI values of different dates 14 days are of course different, connecting different points, that is, the trajectory of RSI.
Related advantages of folding and editing this paragraph
Folding can clearly show the intentions of buyers and sellers.
It is clear at a glance when it is overbought and oversold, which makes people better grasp the buying opportunity. However, any analysis tool has its advantages and disadvantages. Technical analysts often warn people that the analysis using RSI should not fall into the quagmire of formulation and mechanization, because everything has special circumstances, and it is not surprising that RSI exceeds 95 or is lower than 15. Don't buy it in the market as soon as it is below 30, and sell it when it is above 70. It should be analyzed in combination with other graphs.
Fold various graphs that can form a histogram.
Such as head and shoulder top, double top and double bottom triangle, flag shape, amplification, support line, resistance line, etc. [ 1]
The calculation of RSI generally takes 14 days as the cycle, taking the rise as the sum of the buyer's strength and the fall as the sum of the seller's strength, and judging the future trend of the exchange rate is based on the comparison of the two forces.
Disadvantages associated with folding and editing this paragraph
1. When there is a unilateral market, the rsi indicator will be passivated at a high or low level, so it will be sold or bought prematurely.
2.RSI has no obvious and regular buying or selling signals. When the pointer is at a high level, it can only show that the possibility of emotional inversion is increasing, and there is no way to further clearly point out the time point.
3. Generally speaking, the deviation signal of RSI is usually verified afterwards, and it is difficult to see beforehand that the "deviation" trend between RSI indicators and stock prices is often lagging behind;
On the one hand, the market has reversed, but the "deviation" signal of this indicator may lag behind; On the other hand, under the influence of various random factors, sometimes the market really begins to reverse after several "deviations". At the same time, when judging the phenomenon of "deviation" of indicators, the number of "deviations" corresponding to real inversion is inconclusive. One, two or three deviations may have a trend change, which is difficult to confirm in actual operation.
4. Because RSI is an indicator of ratio, it will be weak in trend analysis.
5. It should be noted that different time parameters of RSI indicators will give different results;
Different investors have different personal preferences for the set time period. Theoretically speaking, the RSI index with short period is sensitive, but it oscillates more quickly and has poor reliability. Although the signal of RSI indicator with a long period is reliable, the sensitivity of the indicator is not enough and the response is slow, which often misses the opportunity to buy and sell.
In addition, because RSI is based on the closing price, if the market fluctuates greatly and the upper and lower shadow lines are long, it is impossible for RSI to accurately reflect the changes in the market at this time.
6. Exponential passivation caused by overbought and oversold is easy to send out wrong operation signals;
In the middle stage of "bull market" and "bear market", the RSI value rises above 90 or falls below 10 from time to time. At this point, fuzzy misleading information will appear after the indicator is passivated. If you follow this indicator, you may make mistakes, miss profit opportunities or enter the market too early and get stuck.
7. When the RSI value fluctuates around 50, the index often loses its reference value.
Generally speaking, a value of RSI between 40 and 60 is of little use. According to the application principle of RSI, when RSI breaks through the 50 dividing line from below 50, it means that the stock price has turned stronger; RSI fell from above 50 to below the 50 boundary, indicating that the stock price weakened. However, the actual situation often makes investors confused. It is quite common that the stock price turns from strong to weak and then does not fall, and from weak to strong and then does not rise. This is because under normal circumstances, RSI will take the lead in finishing the consolidation when the direction of the market or individual stocks is unclear, and it will become stronger or weaker.