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Najska (OP)
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March 01, 2014, 01:55:56 AM
Last edit: March 01, 2014, 09:24:02 AM by Najska
 #1
Hi fellows,

I have a question which may sound a bit numb. Why do traders use RSI instead of RS? For instance, let's say that we determine overbought/oversold lines as 20 and 80 using RSI. Then it's exactly the same as using RS and setting the lines to 0.25 and 4. The only difference is RS ranges from 0 to infinity whereas RSI is calculated so as to be fit in the range of 0 and 100. That may be meaningful for a human trader but I don't see any reason for using RSI in an algorithmic trading software. Any ideas?

Addition: Or you may have 100*exp(-RS) so that you have an index between 0 and 100.
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