Indicator: Relative Vigor Index(Relative Vigor Index, RVI) was developed by a very famous author of technical analysis - John Eilers. He also created very popular indicators - MESA and EPOCH. John Eilers is considered one of the best specialists in the field of technical market analysis.

Relative Vigor Index (RVI): definition and formula

The idea of ​​its creation is similar to other oscillators: closing prices usually exceed opening prices in an uptrend and show a lower value in a downtrend.

Relative Vigor Index is calculated by the formula:

where:
Open - candle opening price;
High - the maximum price of the candle;
Low - minimum candle price;
Close - candle closing price;

RVI is similar to the Stochastic oscillator formula. The difference between them is that the Relative Vigor Index compares the closing price and the opening price, and not the minimum price, as is the case with Stochastic.

That is, the Relative Vigor Index is a value equal to the actual price change for a certain period of time, normalized to the maximum value of the price range for this period.

As a rule, when using RVI, two lines are shown on the chart.

1. The first is RVI, in which instead of the price difference between Close and Open and High and Low, the sums of 4-period symmetrically weighted moving averages are used.

Formula example:

MovAverage = (Close - Open) + 2x (Close - 1 - Open - 1) + 2x (Close - 2 - Open - 2) + (Close - 3 - Open - 3)

Where:
Close-1, Close-2, Close-3 are closing prices 1, 2 and 3 periods ago, and Close is the current closing price
Open-1, Open -2, Open -3 are the opening prices 1, 2 and 3 periods ago, and Open is the current closing price

After that, find a 4-period symmetrically weighted moving average from the denominator:

RangeAverage = (High - Low) + 2x (High - 1 - Low - 1) + 2x (High - 2 - Low - 2) + (High - 3 - Low - 3)

Where:
High -1, High -2, High -3 are high prices 1, 2 and 3 periods ago, and High is the high price of the last bar
Low -1, Low -2, Low -3 are low prices 1, 2 and 3 periods ago, and Low is the low price of the last bar.

As a result, the ratio of these two amounts for the last four periods is found.

2. The second line is a 4-period symmetrically weighted moving average from the first:

RVIsignal = (RVIaverage +2 x RVIaverage - 1 + 2 x RVIaverage - 2 + RVIaverage - 3)/6

An example of an indicator can be seen in the figure:

Relative Vigor Index (RVI): Applications and Disadvantages

Relative Vigor Index commonly used to measure the confidence to continue the current movement in the market. It is generally accepted that each price reflects the valuation of an asset in a certain trading period. The indicator measures the position of closing prices in relation to other asset prices. The result obtained is smoothed by the calculation of the moving average, which shows a more smoothed balanced value for a certain period. It is used to smooth out uncertainty in the market.

As a result, RVI shows the intensity of market movement, determined by closing prices. It shows the balance of market sentiment over a specified period. The moving average line shows the balance of market sentiment over a longer period.

Signals when using the RVI indicator, as a rule, are intersections.

If the RVI indicator is above the signal line, this indicates that the market is dominated by buyers and it is necessary to open positions to buy. If the RVI is below the signal line, this indicates the dominance of sellers, so it is better for the trader to use short positions.

It should also be noted that the Relative Vigor Index does not show overbought or oversold zones. Therefore, this moment is better measured by other oscillators.

As a rule, the Relative Vigor Index moves in the same direction as market prices. And this allows him to give accurate signals during trading.

Use of direct signals.

As we have already said, the main signal is the intersection of the lines, which are often ahead of the market cycles.

A signal to buy is when the RVI line crosses the signal line from the bottom up. In this case, Stop-Loss is set below the latest local lows.

A signal to sell is when the RVI line crosses the signal line from top to bottom. In this case, Stop-Loss is set above the previous maximum value.

Use of confirmation signals.

It is generally accepted that with an increase in the pace of trend movement, one can observe an increase in RVI. Indeed, in such a situation, closing prices are usually higher than the intra-period trading range (high-low). Opening prices in this case will approach the minimum.

The downward direction of RVI is a confirmation of the decline in market prices.

The main disadvantage of the indicator is that it works inside the trading range and a large number of false sell signals in an uptrend and buy signals in a downtrend. For this reason, it is often used with a trend indicator.

Indicator code for TradeSation, Dealing Desk and Multicharts

The code is a generalized function of the symmetrically weighted moving average moving average, which can also be used in other indicators. Many programs include this SWMA. It is often referred to as the "triangular moving average". If not, use the code below.

Type: Function, Name: TriAverage_gen

inputs:Price(numericseries), Length(numericsimple);
variables: Length1(0), Length2(0);
Length1=Floor((Length+1)*.5);
Length2=Ceiling((Length+1)*.5);
TriAverage_gen=Average(Average(Price, Length1),Length2);

Type: Indicator, Name: Relative_Vigor_Index

inputs: Length(10);
variables: Change(0), MyRange(0), Num(0), Den(0), RVI(0), RVISig(0);
Change=Close-Open;
MyRange=High-Low;
Value1=TriAverage_gen(Change,4);
Value2=TriAverage_gen(MyRange,4) ;
Num=Summation(Value1,Length);
Den=Summation(Value2,Length);
if Den>0 then
RVI = Num/Den;
RVISig = TriAverage_gen(RVI,4);
Plot1(RVI,"RVI");
Plot2(RVISig,"Sig");

Hello. In today's review, we will talk about an indicator that is not very popular among technical traders, but definitely deserves attention. And the reason lies in the fact that the author of this indicator is the well-known master of technical analysis, John Ehlers. In 2002, one of his tools, the Relative Vigor Index (RVI), was described in detail in the Stocks and Commodities magazine in an article of the same name. About how it works, what it is and whether it is worth using it at all, you will learn from this review.

Description of the RVI indicator

Relative Vigor Index (RVI) translated as an index of relative cheerfulness. RVI is an oscillator-type technical indicator, the main task of which is to determine the prevailing direction (trend). Oscillators are usually used to work in consolidations (flats, corridors), but RVI is also referred to as “trend-following” tools, so this indicator is a kind of hybrid. RVI is based on the idea that in a bull market, closing prices are predominantly higher than opening prices, while in a bear market, closing prices tend to lead lower than opening prices.

Formula for constructing the indicator:

Open - bar opening price ("candles"),

Close – closing price of the bar (“candles”),

High - the maximum price of the bar ("candles"),

Low - the minimum price of the bar ("candles").

Seems like a simple formula. But in fact there is a certain difficulty. On the chart, the indicator is displayed as two lines. The first line is the main RVI line, which is smoothed by a 4-period symmetrical moving average. The second line is a signal line, it is a symmetrically weighted moving average from the first line. Let's look at how the first RVI line is calculated correctly. The numerator of the RVIclose-open formula will take the following form:

Open(i) - the opening price of the current bar ("candles"),

Close(i) – closing price of the current bar (“candles”),

Open(i-1), Open(i-2), Open(i-3) – opening price 1, 2, 3 periods ago,

Close(i-1), Close(i-2), Close(i-3) – closing price 1, 2, 3 periods ago.

This method is the averaging of a symmetrically weighted moving average with a period of 4. The RVIhigh-low denominator is calculated in the same way:

High(i) - the maximum price of the current bar ("candles"),

Low(i) - the minimum price of the current bar ("candles"),

High(i-1), High(i-2), High(i-3) – maximum price 1, 2, 3 periods ago,

Low(i-1), Low(i-2), Low(i-3) – low price 1, 2, 3 periods ago.

As a result, the main line of RVIfinal:

Σ is the sum of values,

N – smoothing period (set in the terminal).

The second line is a signal line, it also averages the result of the RVIfinal of the 4-period symmetrically weighted moving average. Signal line formula:

RVIfinal – RVI result of the current period,

RVIfinal (i-1), RVIfinal (i-2), RVIfinal (i-3) – the result of RVI 1, 2 and 3 periods ago.

Both RVI lines are built in this way. In the MT4 trading terminal, by default, RVI is built with a period of N=10. But this indicator can be changed. The shorter the period is, the more sensitive the indicator will be to price changes. Conversely, the longer the period, the less sensitive the indicator.

Visually, RVI is very similar to another oscillator-type indicator - Stochastic Oscillator. Only the stochastic compares the closing price level relative to the previous range of high and low prices, and RVI relative to the opening prices. The main RVI line represents the driving force of the market by comparing closing prices with opening prices, while the signal line displays the same driving force over a longer period of time.

As a result, when these lines cross, equalization or balance of the equilibrium of the driving energy occurs. When the lines diverge and run in parallel, a market imbalance occurs, which provokes movement in the market. Of course, this is all purely theory. But our simulation will help determine how the indicator behaves in practice. The result of this test will be more interesting for traders than mathematical formulas.

Application of the RVI indicator

As in the case of the Stochastic Oscillator, the RVI indicator monitors the intersection of the lines.

A buy signal comes when the main RVI line crosses the signal line upwards.

A sell signal comes when the main RVI line crosses the signal line from top to bottom.

Unlike Stochastic, RVI does not have any overbought/oversold zones. The use of the indicator is reduced solely to the intersection of the main and signal lines. Crossing zero is also not a signal to buy or sell. But we will check this point anyway.

Some traders in history determine 2 extreme boundaries of indicator fluctuations, beyond which RVI is no more than 10-20% of the time. And then trading is carried out only in those cases when the indicator values ​​go out of these extreme areas. It is very similar to trading with the Stochastic Oscillator indicator.

Modeling

Modeling means testing the indicator on historical data using Excel.

The quotes archive is taken from the Alpari terminal. Pair - EUR/USD, timeframe - Daily (15 years testing period - from 01/01/2001 to 07/29/2016). The commission (spread, slippage, swap) was taken at an average of 1.5 pips on 4 digits. All results are also displayed in 4-digit points. Testing was carried out under the condition of taking the yield of a bar ("candle") from the opening price (Open) to the closing price (Close). The opening of a transaction occurs after the closing of the previous bar (“candles”).

Test 1. We test the RVI indicator with a period of 10.

Signal 1.1. We buy when the main RVI line crosses the signal line from bottom to top. We sell when the main RVI line crosses the signal line from top to bottom.

Test results report on signal 1.1:

Signal 1.2. We buy when the main RVI line is above 0. We sell when the main RVI line is below 0. We do not take into account the intersection of the main and signal lines.

Test results report on signal 1.2:

Signal 1.3. We buy when the main RVI line crosses the signal one upwards, provided that the main RVI line is above zero. We sell when the main RVI line crosses the signal line from top to bottom, provided that the main RVI line is below zero.

Test results report for signal 1.3:

Signal 1.4. We buy if the main RVI line is below 0. We sell if the main RVI line is above 0. We do not take into account the intersection of the main and signal lines.

Test results report on signal 1.4:

Signal 1.5. We buy when the main RVI line crosses the signal one upwards, provided that the main RVI line is below zero. We sell when the main RVI line crosses the signal line from top to bottom, provided that the main RVI line is above zero.

Test results report on signal 1.5:

Signal 1.6. We make a reverse signal 1.1. We buy when the main RVI line crosses the signal line from top to bottom. We sell when the main RVI line crosses the signal line upwards.

Test results report on signal 1.6:

Preliminary result for test 1: it is safe to say that the test failed. All signals turned out to be unprofitable without any prospects. But in the process of testing, an interesting moment was discovered. Resonance occurred after testing the last signal. It turned out that if you work on the indicator exactly the opposite, in the end the result will be better than other strategies. Here's one reason why technical indicators don't work in the financial markets.

Test 2. Testing the RVI indicator with a period of 21.

Signal 2.1. We buy when the main RVI line crosses the signal line from bottom to top. We sell when the main RVI line crosses the signal line from top to bottom.

Signal test results report 2.1:

Signal 2.2. We buy when the main RVI line is above 0. We sell when the main RVI line is below 0. We do not take into account the intersection of the main and signal lines.

Signal test results report 2.2:

Signal 2.3. We buy when the main RVI line crosses the signal one upwards, provided that the main RVI line is above zero. We sell when the main RVI line crosses the signal line from top to bottom, provided that the main RVI line is below zero.

Test results report on signal 2.3:

Signal 2.4. We buy if the main RVI line is below 0. We sell if the main RVI line is above 0. We do not take into account the intersection of the main and signal lines.

Test results report for signal 2.4:

Signal 2.5. We buy when the main RVI line crosses the signal one upwards, provided that the main RVI line is below zero. We sell when the main RVI line crosses the signal line from top to bottom, provided that the main RVI line is above zero.

Signal test results report 2.5:

Signal 2.6. We make a reverse signal 2.1. We buy when the main RVI line crosses the signal line from top to bottom. We sell when the main RVI line crosses the signal line upwards.

Test results report on signal 2.6:

Preliminary result for test 2: in general, an increase in the period of the RVI indicator did not lead to an improvement in performance. The total loss from all test 2 signals is approximately equal to the total loss from all test 1 signals. But still, there is 1 signal that showed itself very well, this is signal 2.2. According to his rules, we bought when RVI was above 0, and sold when RVI was below 0. In second place is again a signal to trade RVI on the contrary.

Test 3. For all signals, we modeled a loss limit (stop-loss) of 100 pips on the 4th sign. Ultimately, signals 1.2, 1.6, 2.2 and 2.6 showed the best results.

Signal 3.1. RVI with a period of 10. We buy when the main RVI line is above 0. We sell when the main RVI line is below 0. We do not take into account the intersection of the main and signal lines. Add a stop loss of 100 points at the 4th sign.

Signal test results report 3.1:

Signal 3.2. RVI with a period of 10. Reverse signal - buy when the main RVI line crosses the signal line from top to bottom. We sell when the main RVI line crosses the signal line upwards. Add a stop loss of 100 points at the 4th sign.

Signal test results report 3.2:

Signal 3.3. RVI with a period of 21. We buy when the main RVI line is above 0. We sell when the main RVI line is below 0. We do not take into account the intersection of the main and signal lines. Add a stop loss of 100 points at the 4th sign.

Signal test results report 3.3

Signal 3.4. RVI with a period of 21. Reverse signal - we buy when the main RVI line crosses the signal line from top to bottom. We sell when the main RVI line crosses the signal line upwards. Add a stop loss of 100 points at the 4th sign.

Test results report on signal 3.4:

Preliminary result for test 3: in this test, we provided the signals with the best profit results. The best indicators of net profit in points are shown by zero line crossing signals and a reverse signal. The highest profit was 17,544 points on 4 digits in 15 years, which is an average of about 97 points per month. Separately, it is worth highlighting the reverse signal when trading RVI with a period of 21 - an indicative linear increase.

findings

The Relative Vigor Index or relative vigor index refers to technical instruments of the oscillator type. The indicator is used both in trends and in lateral movements. In our simulations, we found that trading methodical RVI signals can lead to significant losses. The most surprising thing is that the indicator shows the best results when trading exactly the opposite - buy when the main RVI line falls below the signal line, and sell when the main line rises above the signal line. It also turned out that it is quite effective to use RVI for zero line crossing signals.

But you should not use RVI as a standalone trading tool. It shows too many false signals. Therefore, it is better to confirm the indicator signals with some additional filters. Alternatively, open RVI only in the direction of the prevailing trend.

Disclaimer: This test review is subjective and may contain inaccuracies due to human error.

A variety of parameters are used as characteristics of the market. One of them is "Cheerfulness" - a characteristic invented by J. Eilers and denoting the strength of the current trend and the likelihood of its imminent end. To calculate this market parameter, use RVI indicator, detailed description which is located below.

Best Broker

The main tool of this technical analysis built into the MetaTrader TP (located in the Oscillators section of the Navigator window) is the assumption that the Close price is most often above the Open price in an uptrend. Accordingly, on a downtrend, on the contrary, the Close price is most often under the Open price. At the same time, a formula is used for calculation that is equivalent to the one used when calculating the Stochastic, but instead of the lowest Low price for the calculation period, it uses the Open price (when compared with the Close price).

How is the RVI indicator calculated?

The exact formula for its calculation is two-stage:

1. calculating the ratio of the difference between the Close-price and the Open-price to the difference between the High-price and the Low-price in the billing period;
2. calculating the moving average from the previous result.

Based on the result of each stage, a separate curve is built (thus, RVI is displayed as two curves in the basement window). The curve (green by default) drawn from the first result reacts more sharply to price fluctuations, so it reflects short-term price dynamics. And the curve (red by default), built according to the second result, is smoother and reflects the medium-term dynamics.

RVI indicator: how to use

One of the signals of the Relative Vigor Index is to update several previous highs or lows. In the first case, overbought occurs, which serves as a sell signal (red vertical in Fig. 1). In the second case, oversold conditions appear, which is a buy signal (green vertical in Fig. 1).

The second type of signals is the intersection of curves:

• if the green crosses the red from above, then this is a signal to sell;
• if the red crosses the green from above, then this is a signal to buy.

And the third type trading signals RVI - divergence. Her feature– different direction of the price dynamics and the indicator curve. Divergence often occurs during corrections and reversals, so:

• if the price is rising and the RVI curve is falling (i.e., price highs are rising, and indicator highs are falling, which is indicated by red straight lines in Fig. 2), then you should sell;
• if the price falls and the RVI curve rises (i.e., price lows decrease, and indicator lows rise, which is indicated by green lines in Fig. 2), then you should buy.

Since RVI is a typical oscillator, its signals are leading and there are many false signals in their total number. Therefore, together with it, you need to use some kind of filter, preferably a trend indicator.

Detailed description of examples of transactions based on the signals of the RVI indicator for forex

In the simplest case, the RVI trading strategy is to buy when oversold and sell when overbought. That is, a permanent presence in the market is assumed. For example, in fig. 3, the left red vertical line is drawn through the candlestick, on which the indicator maximum was updated (overbought), so it was possible to sell at the opening of the next candlestick (the selling level is the upper blue horizontal line). Then the price and the indicator curve began to fall, and oversold conditions formed on the candle through which the right red vertical was drawn (the indicator low was updated). Therefore, on the next candle, the deal was closed (at the level of the lower blue horizontal) in profit.

On fig. Figure 4 shows the formation of a divergence (indicated by green lines) - the price is growing, updating the highs with a falling indicator curve, which indicates a probable price reversal down. Therefore, it is possible to sell on a candle through which the red vertical is drawn (at the level of the upper blue horizontal). Then the indicator began to decline and updated the minimum, thus forming an oversold signal. Therefore, at the level of the lower blue horizontal (at the close of the candle, indicated by the right red vertical), the deal was closed with a profit.

As it was already downloaded above, there are quite a lot of false ones among the RVI trading signals (on a trend, their number can exceed 50% - all trades against the trend are usually unprofitable). Therefore, it is simply necessary to use either a trend indicator, opening positions only in the direction of the trend, or a flat filter, trading only in flat areas.

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Good day, fellow traders!

It is the dream of any trader to receive a leading signal about a possible close market reversal. Technical analysis cannot guarantee accuracy due to the fact that it works only on historical data, but there are indicators that, according to statistics, do this task quite well. One of them is the Relative Vigor Index (RVI), or Relative Strength Index. Here are the important points of today's post, which will be discussed below:

1. The idea of ​​the RVI indicator, its calculation formula and parameters.
2. Basic trading signals that RVI shows for a trader.
3. Strategy using Relative Vigor Index in practice.
4. Some important points, which must be taken into account when working with the indicator.

The main idea of ​​the RVI indicator is that the current price suits the majority of market participants. The calculation method is the same as , but instead of the price lows for the specified number of periods, the opening (Open) and closing (Close) prices are compared. The result is then smoothed using simple (MA) .

Setting and signals from the RVI indicator in MT4

The RVI indicator is present in the standard set of trading oscillators, so you do not need to download and install it additionally.

The final chart of the Relative Vigor Index shows the average "balance" or "vigor" of the market for the analyzed time period, which varies depending on - it can be either one hour or several days or even weeks.

The RVI indicator has only one parameter - the number of periods for calculation, unlike Stochastic, where you can additionally select the price type and the method of smoothing moving averages. In the case of RVI, the calculation is based only on Close prices:

Additionally, you can specify potential overbought/oversold levels, which should be selected individually for each and timeframe.

What basic trading signals can come from the RVI indicator?

Potential entry points to the market appear at the intersection of the "slow" with a period of 10 and the "fast" 4-period moving average RVI. According to the author, the fast line shows the rate of price change and market equilibrium on lower timeframes (less than an hour), and the long line on older ones (from an hour or more).

There is an option to consider crossing the zero level as a sign of the final one, this approach is especially common in trading advisors, and market movements in oversold / overbought zones (established empirically as mentioned above), but most strategies use the line crossing as shown further in a practical example.

Strategy using the RVI indicator

Once again, I remind you that I am describing such strategies or tactics only for visual application and the essence of the work of one or another indicator.

So, like any other technical oscillator, RVI cannot be the basis or the only tool for making decisions and only confirms the data of trend indicators. Therefore, for example, we will consider a strategy called " New method Sine", which has two positive factors:

1. Positive results over the past few years;
2. Only standard indicators of the MetaTrader 4 terminal are used.

We install the following instruments on the price chart:

• Exponential (EMA) moving averages for Close prices with periods of 18 (red) and 28 (blue).
• Relative Vigor Index indicator - number of periods 100.

→ Buy deal. The green RVI line crosses the red one from the bottom up, and then we wait for the confirmation of the signal on the chart - the price goes above both moving averages:

→ Sell trade. Opposite conditions: the green RVI breaks the red from top to bottom, the chart is below the moving averages.

Important! We follow not only on the indicator, but also on a higher timeframe. The RVI lines have crossed and, together with the moving ones, are going up - the signal to buy is strengthened, respectively, if we open a sale down with a higher probability of profit.

Another important note, additional confirmation of the signal can be obtained by watching the indicator chart. If, after the point of intersection of the lines, RVI continues to move in sync with the moving averages, the probability of a profitable position also increases.

Closing positions: keep the trade open until a return signal is received, or the moving averages cross in the opposite direction. Particular attention should be paid to the behavior of moving averages, if the distance between them “shrinks”, this indicates the close end of the trend and you can close the position without waiting for confirmation from RVI. Here is one way out:

And in conclusion of today's topic on the RVI indicator, pay attention to a few important points to consider when working with this tool:

1. The abbreviation "RVI" has another technical indicator - Relative Volatility Index or relative volatility index. It is not included in the basic set of MetaTrader, but is often used in stock trading terminals, and beginners often confuse it with the Relative Vigor Index. Despite the similarity in name, these are completely different instruments: the Volatility Index was developed only to determine the current strength, which means it cannot give any trading signals. It is used only in combination, for example, with the same Vigor Index.
2. There are no standard and universal overbought/oversold levels. This has already been mentioned above, but we will repeat it again, since persistent attempts to use RVI as a replacement for Stohastic or . This is the wrong approach!
3. In addition to line intersections, do not forget about divergences or divergences in the movement of the price chart and the indicator. Such signals are the strongest and although they are much rarer than on the same RSI, they are present and should not be missed.
4. As with other oscillators, signals are only reliable on trending areas. During periods, the indicator is practically useless.

So, friends, today you have received all the basic information on the RVI or Relative Vigor Index indicator, learned what kind of instrument it is, how it works and how it can be used in trading. So you can safely test it and use it in the development of your systems or as an additional filter for existing ones.

In just a few days, I will publish an article with information and tips for effective intraday trading, so stay in touch and do not miss this release!

That's all, good luck to everyone and see you soon on the pages of our forex blog!

Sincerely, Alexander Siver

Consider a simple and understandable to everyone, but useful and effective indicator - Relative Vigor Index (translated Relative Vigor Index). After spending only 3 minutes of your time, you will learn how to determine the strength of the current trend and find turning points. Read Fast!

Detailed description of the RVI indicator

The RVI indicator belongs to the class of oscillators. It measures the potential of the current price movement to maintain its direction or reverse.

This is based on the principle that in a rising market, closing prices are expected to higher than opening prices. Well, in a falling market, on the contrary, closing prices will be, basically, below opening prices. This, by the way, is in technical analysis - when closing prices are higher than opening prices - this is, well, for a downward trend, it’s vice versa. So that RVI simply illustrates this fundamental principle in a visual form, in the form of a simple line, which is very convenient.

So essentially the RVI indicator tries to determine if the market is bullish or bearish by comparing the closing and opening prices. Further, the indicator compares this data with the recent price range and gives us averaged information in the form of a line in the indicator window. The essence of these indications is to determine whether the current movement has potential for further development or you should expect a reversal (and maybe a transition to). Or, in other words, to determine how strong the current trend is and whether it is preparing to end.

Formula and calculation method

I don't think it's very important to know, except for general development. Fortunately, in trading we don’t have to sit and calculate something according to the formula, but for the especially inquisitive, here it is:

RVI = (close-open)/(high-low)

Setting the RVI indicator

The only key parameter here is Period, which by default is equal to 10 . This period is selected empirically for each currency pair and separately, simply by enumeration. You must ensure that the highs of the indicator coincide with the price highs on the chart. To start, leave 10 and see what happens. It is very likely that the result will be quite satisfactory and you will not want to change anything.

Approximately as shown in the screenshot. The extremes of the indicator coincide with the extremes on the chart. This is a daily chart. USDCAD, setting RVI period here equals 5 .

In the tab Levels you can add some levels that are significant for you to the indicator window, perhaps by analogy with the levels.

How to read indicator readings and signals

Please note that when the indicator lines cross at zero or very close to it, then it is better to miss such a signal.

And that's it. I will add that:

• If a green Line indicator is in the upper area, it was crossed Red line and now red is above green- This is a signal of the end of the bullish trend and the entry into sales.
• And vice versa, if the green line is at the bottom and they intersect with the red one so that now the green line is above the red is a buy signal.

As you can see, nothing complicated. Take a look at the chart and you'll understand.

Cautions

Like absolutely any indicator, Relative Vigor Index will sometimes give false signals. And like any indicator, it requires additional confirmation signals. You can’t just take and enter the market on the signal of only one indicator.

Therefore, for a full-fledged and profitable trading, it is necessary to combine RVI with other indicators or technical analysis techniques. For example - with . I will show you an example of work now.

RVI strategy

We look at the screenshot, we see. As we know, this is a bearish trend reversal signal. We look into the window of the RVI indicator and see that it also gives us a signal to buy! This means that both signals are talking about the same thing - it's time to buy. Signals confirm each other. We enter into purchases, set a stop loss for the nearest local minimum (in this case, the tail of the Hammer candle), set the take profit at our discretion - either multiply the stop loss by 2 or 3, or set it to the nearest one (we read how to find them by clicking on the link) and we sit on the priest exactly in anticipation of profit.