Is the P123 RSI calculation smoothed or raw? I am not suggesting any change be made. I am simply asking because I am using RSI in a ranking system and trying to crosscheck on Stockcharts.
The P123 description says:
[i]Calculation
RSI = 100 - ( 100 / (1 + RS))
RS = (average of N up closes) / (average of N down closes)
N = period in bars (typically 14)
The more data points that are used to calculate the RSI, the more accurate the results. Portfolio123 uses up to 100 bars (assuming that much exists) which is a compromise between accuracy and performance. [/i]
Simply using the average of the up and down closes over N is raw RSI.
Stockcharts smoothes its RSI. To calculate the RS ratio for a 14 period RSI:
[i]Average Gain = [(previous Average Gain) x 13 + current Gain] / 14.
Average Loss = [(previous Average Loss) x 13 + current Loss] / 14.
Taking the prior value plus the current value is a smoothing technique similar to that used in exponential moving average calculation.[/i]
Does P123 use the straight N period average of gains and losses? Or does P123 use ((Previous Period Avg Gain/Loss * N-1) + Current Gain/Loss) / N
Any help would be appreciated. Thanks.
Whatever you do, don’t change the current formula. I like my RSI-based ranking system just fine.