Calculating the RSI

Calculating an RSI is fairly complex, even when using a spreadsheet. Instead of spending several pages going through the steps for calculating an RSI, I give you a brief overview of the formulas that drive it:

1. Add up the price change on up days and the price change on down days for the number of periods (usually 14) in your look-back range.

2. Take those individual sums and divide them by 14.

3. Then calculate the relative strength (not the relative strength index) by dividing the up day average by the down day average.

RS = Average up days * Average down days

The RSI takes the up and down days and plugs that data into a fairly complex formula, resulting in a reading between 0 and 100. The following equation explains the math behind the RSI:

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