What it is
The Relative Strength Index, or RSI, compares the size of a stock's recent gains with the size of its recent losses. It runs from 0 to 100. J. Welles Wilder introduced it in 1978, and the standard setting looks back 14 sessions, which is why charts label it RSI 14.
How it is calculated
Take the average gain on the up days and the average loss on the down days over the last 14 sessions. Wilder's method smooths both: each day, the old average carries 13 parts and the new day 1. Divide the average gain by the average loss to get the relative strength. RSI puts that ratio on a scale of 0 to 100: 100 minus 100 divided by one plus the ratio.
A stock whose gains and losses were the same size reads 50. One that rose every day of the window reads 100, and one that fell every day reads 0.
How traders read it
Traders mark two lines. A reading above 70 is traditionally called overbought, and one below 30 oversold. Those words describe the last 14 sessions, not the next one: a stock in a strong uptrend can hold above 70 for weeks, and one in a long slide can stay under 30.
Many traders also treat 50 as the line between a stretch of mostly gains and a stretch of mostly losses. Others look for divergence, when the price makes a new high and RSI does not, or a new low that RSI does not confirm.
RSI is not the same thing as relative strength, which compares a stock's change with the market's. The names are close and the ideas are not.
RSI on Breakaway
Every public stock page shows RSI 14 under Also on the chart, with the band it sits in. Members can filter every stock the scanner covers by RSI. RSI does not count toward the Quality Score: in our tests on 20 years of daily prices, adding it did not improve the score.