Abbreviation: RMI
Category: Price Momentum Indicators
Input Parameters:
| Name | Range | Default |
| Closing Price | Close | |
| Change Periods | Int >= 1 | 5 |
| RSI Periods | Int >= 1 | 5 |
Calculation:
100 – (100 / ( 1 + RM ))
where
RM = Smoothed Increases / Smoothed Decreases
On nth period
Smoothed Increases = Avg(Gain, n)
Smoothed Decreases = Avg(Loss, n)
Every period thereafter
Smoothed Increases = ( Previous Smoothed Increases * (n-1) + Gain ) / n
Smoothed Increases = ( Previous Smoothed Decreases * (n-1) + Loss ) / n
If ( Close > Close x periods ago) then
Gain = Close – Close x periods ago
Loss = 0
else if ( Close < Close x periods ago ) then
Gain = 0
Loss = Close x periods ago – Close
else
Gain = 0
Loss = 0
x = Change Periods
n = RSI Periods
Avg represents Simple Moving Average
Discussion:
The Relative Momentum Index measures price momentum. It is the same calculation as the Relative Strength Index, but with a variable increase/decrease lookback as opposed to the fixed one period lookback of the Relative Strength Index. Mathematically, the Relative Momentum Index ranges between values of 0 and 100. The closer the index is to 100, the stronger the indication of an overbought market. The closer the index is to 0, the stronger the indication of an oversold market. In general, index values above 50 indicate a possible uptrend, while index values below 50 indicate a possible downtrend.