Traders' Tips from TASC Magazine

The Self-Adjusting RSI

David Sepiashvili’s article, “The Self-Adjusting RSI,” describes two methods of adjusting the width of the overbought and oversold bands for the RSI. Both of these methods have been incorporated into a single MetaStock indicator. This formula will prompt for the length of the RSI, the constants used to calculate the bands, and the method to calculate the bands.

To enter this indicator into MetaStock:

  1. In the Tools menu, select Indicator Builder.
  2. Click New to open the Indicator Editor for a new indicator.
  3. Type the name of the formula.
  4. Click in the larger window and type in the following formula.

    Name: Self-Adjusting RSI
    Formula:
    x:=Input("number of periods for RSI",1,2000,14);
    k1:=Input("standard deviation constant",0.1,5,1.8);
    c1:=Input("SMA constant",0.1,5,2);
    m1:=Input("method <1=SD/2=SMA>",1,2,1);
    top:=If(m1=1,
    50+(k1*Stdev(RSI(x),x)),
    50+(c1*Mov(Abs(RSI(x)-Mov(RSI(x),x,S)),x,S)));
    bottom:=If(m1=1,
    50-(k1*Stdev(RSI(x),x)),
    50-(c1*Mov(Abs(RSI(x)-Mov(RSI(x),x,S)),x,S)));
    RSI(x);
    top;
    bottom
  5. Click Ok to close the Indicator Editor.

William Golson
Equis International


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