Relative Strength Index
An oscillator bounded between 0 and 100 that compares the average size of recent gains with the average size of recent losses.
Formula
RSI = 100 - 100 / (1 + RS), where RS = Average Gain over n periods / Average Loss over n periods
Unit
ratio (x, times)
In depth
Despite the name, the RSI compares a security only against itself, not against the market or any other security — the confusion with relative strength, which does compare securities, is one of the most common in technical analysis. Readings above 70 and below 30 are conventionally called overbought and oversold, but a strongly trending security can hold above 70 for months, so acting on the threshold alone is a documented way to fight a move. The 14-period default comes from Welles Wilder's original 1978 work and has no optimality property. The indicator is described here as a calculation, not as a signal to buy or sell.
Worked example
Over 14 periods the average gain is ₹2.40 and the average loss ₹1.20, so RS = 2. RSI = 100 - 100 / 3 = 66.67. To reach 70, gains would need to average 2.33 times losses.
Illustrative figures, chosen so the arithmetic is easy to follow. Not a live price and not a valuation of any company.
Educational reference only
This entry explains what “Relative Strength Index” means. It is not investment advice and not a recommendation to buy or sell any security. Any numbers above are illustrative, not live prices, and nothing here predicts price direction or rates a stock. Consider your own circumstances and consult a SEBI-registered investment adviser before acting.