Relative Strength Indicator (Alpha)
by PRASHANT SHAH -
The ratio chart that we discussed is a tool to perform relative strength analysis. Some other techniques may also be used to plot the relationship between two instruments. Relative Strength –Alpha The relative strength indicator (not RSI) is another widely followed indicator to study relative strength. Unlike ratio charts, we need to define the look-back ... Read more
Relative Strength-Alpha Volatility
by PRASHANT SHAH -
The calculation of RS–Alpha compares the returns of both stocks. But let us consider a scenario detailed below. Suppose say stock A generated 10% returns and Stock B 12% over the same period. Logically, stock B is a better performer or an outperformer. Let us introduce another layer of information here in the form of ... Read more
Normalisation of ratio chart
by PRASHANT SHAH -
Many analysts use a normalised ratio chart. This is nothing but a ratio chart that is calculated from a particular base date. To do this, we calculate the price of one instrument by another and start the calculation from a chosen date. The base value on the start date is 100. This makes all instruments ... Read more
Ratio Rank Indicator
by PRASHANT SHAH -
We can measure the performance of the security over a period to find top-performing stocks, or we can scan for RS indicator and find the top-performing stocks. If there is strength in the trend, the stock will continue to outperform a greater number of sessions during the period. If we also measure the strength of ... Read more
D Cap-Shoe Indicator
by PRASHANT SHAH -
We discussed techniques of plotting ratio charts separately or below the price. It is a good idea to study relative strength in candlestick charts itself as an overlay. The proprietary D cap-shoe indicator does precisely this. Let us discuss this indicator. A box will be plotted above or below the candle to capture the behaviour ... Read more
Ratio RSI Indicator
by PRASHANT SHAH -
We discussed the RSI indicator in the previous chapter. The RSI indicator can be plotted on the ratio chart as well, and it would capture the strength or the weakness of the numerator. We typically plot the RS indicator on the price chart. But we can also plot the RS indicator of the ratio chart ... Read more
