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--- In equismetastock@xxxx, "bruneski" <iniciante_2000@xxxx> wrote:
> Hi, pumrysh. Thanks for your reply.
>
> What are the differences between the traditional Wilder's RSI and
> Cutler's RSI? Could you write down both formulas for comparison?
What
> would be the corresponding Metastock code for Wilder's RSI?
>
> Thanks again.
Bruneski,
Roy has graciously provided a Wilders RSI for you in an earlier post
so I won't duplicate it here. I will though discuss the differences
between the 2 RSI indicators that we have provided.
The secret is in the smoothing methods used. In Cutlers you will
notice that the smoothing methods used are an exponential moving
average and a summation. The summation is nothing more that a simple
moving average.
The Wilders RSI uses Wilders smoothing. Wilders smoothing is really
nothing more than an exponential smoothing with longer periods used
for the lookback periods. The formula for the lookback periods is
(2 x lookback - 1).
The RSI is certainly one of my most favorite indicators. Once you
really begin to understand how the indicator works you will find it
to be one of the most rewarding indicators used in technical
analysis. One suggestion that I would give you is to remember that a
minimum of 3 days is needed for rate of change part of the indicator
to work properly.
Preston
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