jamboree 3 posts msg #36899  Ignore jamboree 
7/13/2005 11:44:54 AM
I'm trying to validate the equation for RSI(2), but it looks like i'm getting more RSI=0 than SF is actually presenting...
In other words, whenever 2 consecutive days are up, my average loss (RS denominator) is 0...looking at the RSI formula below:
100(100/(1+RS))
RS = Avg Gain/Avg Loss
Am I forgetting something? Isn't it correct to assume that 2 days up in a row automatically represent an Avg Loss = 0, therefore, RS =0, bringing the RSI formula to:
100100 = 0...
Any help is more than appreciated...
Thanks...

jclaffee 81 posts msg #36904  Ignore jclaffee 
7/13/2005 12:57:29 PM
jamboree. . .
If your average loss is zero, then RS becomes undefinably large as does
(1 + RS). . .[100/(1 + RS)] approaches zero and RSI approaches 100.
The RSI(2) < 1 approach is a bottomfishing reversal system and wallman's original work required three down days with one of those at high (capitulation)volume to trigger.
Check it out in the archives "bollinger bands".
Jim

jclaffee 81 posts msg #36905  Ignore jclaffee 
7/13/2005 12:59:51 PM
A senior moment here!!
I'm fully aware that Holy Grail is the originator of the RSI(2) < 1 technique and I must be going round the corner (as my wife has charged for some time)!
Jim

jamboree 3 posts msg #36907  Ignore jamboree 
7/13/2005 4:02:54 PM
thanks jclaffee!
