FAQ Q1. What is the Relative Strength Index (RSI)? The Relative Strength Index (RSI) is an indicator used in price analysis. It was first described by Welles Wilder in his book New Concepts in Technical Trading Systems (1978). This Wikipedia article provides calculation details. The RSI is typically computed on a 14-day rolling timeframe (RSI14). Generally, A stock is considered overbought when its RSI rises above 70 and oversold when dropping below 30. Q2. How does the cumulative RSI indicator differ from the RSI? The cumulative RSI (CRSI) is a variation of the Relative Strength Index (RSI) that involves adding consecutive RSI values over a specified period. For example, a 2-period cumulative RSI (CRSI2) sums up the last two RSI values and is in a range between 0 and 200. Q3. Is CRSI2 the Holy Grail of indicators? At Chapter 9 of their book "Short Term Trading Strategies That Work," Larry Connors and Cesar Alvarez raise the question of whether the cumulative RSI2 (CRSI2) could be considered the ultimate indicator for traders. However, the claim remains with a question mark. Backtesting demonstrates that relying solely on CRSI2 is insufficient for successful trading strategies. The prevailing consensus among academics and practitioners is that successful strategies typically involve a combination of fundamental and technical analysis. Fundamental analysis identifies promising stocks. Technical analysis focuses on price movements to time trades more effectively. Q4. Why does RSI Alert favor the cumulative RSI2 (CRSI2)? I started RSI Alert to simplify my own approach to investment. My belief is that mid-market stocks offer better long-term returns compared to pension plans. With that in mind, I focus on identifying long-term entry points for a select few stocks to create a diversified portfolio. CRSI2 is particularly suited for this purpose. I prefer not to react to RSI14 changes on a daily or hourly basis. I'm typically making only a few trades per year. The timing of these trades, whether during a market low or the following day, is not a significant concern. What matters is identifying long-term opportunities over the span of months or years. Q5. Why is monitoring the cumulative RSI (CRSI) helpful for trading? The CRSI isn't intended as the sole indicator for buy or sell decisions. Backtesting reveals that optimal entry or exit points don't always align with low or high CRSI values. However, low or high CRSI values can signal opportune moments to analyze a stock's fundamentals. This is where the value of alerts lies - in identifying “good times for analysis.” Often potentially advantageous entry points arise once a year or even every few years, depending on one’s criteria. Automating monitoring assists in maintaining a relaxed and committed approach to long-term strategies. Q6. What thresholds can I set for cumulative RSI alerts? Typically, RSI14 thresholds are set at 30 and 70 out of 100, which translates to 60 and 140 in CRSI2 values. In 'Short Term Trading Strategies That Work,' Larry Connors and Cesar Alvarez advocate values of 5 and 10 for entry strategies. These lower values aim to identify optimal trades among a large number of stocks over time, in their example focusing on the S&P 500 from 1995 to 2007. However, when targeting specific stocks for a long-term portfolio, such low values may lead to missed opportunities. Instead, thresholds between 25 to 50 might be more appropriate. Monitoring numerous stocks with lower thresholds (e.g. 5 to 15) while employing higher thresholds for preferred stocks (e.g. 45) can be an attractive approach. Our default thresholds for backtesting are set at 50 and 150, but we encourage users to adjust them based on their goals, strategies, and timeframes. The combination of backtesting and alerting enables users to customize alerts precisely to their preferences. Q7. How frequently are the cumulative RSI alerts sent? Prices are updated at the close of the market every day. Alert thresholds are assessed overnight from Tuesday to Saturday. Emails are sent out only when a match is found. To verify that alerts are functioning, you can set up an alert that always matches, such as a minimum CRSI2 of 199 or a maximum CRSI2 of 1. We may introduce further options in the future based on your feedback. Q8. Is the service compatible with all stocks and markets? We currently support most stocks from the DJI, DAX, MDAX, SDAX, SMI, and CAC40. Use the search button to verify if your targeted stocks are included. We may expand the selection in the near future. Q9. How accurate are the cumulative RSI alerts? We typically calculate the cumulative RSI with one decimal place, based on adjusted close prices with two decimal places. Note that different providers may calculate adjusted close differently, e.g. by using varying assumptions for averaging dividends. As a result, all alerts should be considered indicative. Q10. Is historical cumulative RSI data accessible through the service? Through the backtesting feature, you can determine if your thresholds have been met in the past. The historical data for most stocks spans from 5 to 20 years, depending on your selected level of service. Q11. Is there technical support available if I encounter any issue with the service? We aim for a seamless experience. Should you encounter any issue, please contact us with subject Support. Q12. I have another question. Please just send your question.