Relative Strength Index
Categories: Financial Theory, Econ, Trading, Metrics
How do you measure the strength of a stock? Try the relative strength index (RSI).
Imagine lots of charts and graphs (fun, right?). The price of a stock is graphed over a period of days, months, or years. Everything is put on a scale of 0–100, and analysts start paying attention when the stock prices go above the 70 mark or below the 30 mark. The idea is that too many peaks and valleys or lots of ups and downs is bad news.