Blog 5 - RSI Index

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After finishing my previous blog post, I went on the Internet and looked around for other math equations that could help analyze the a company's stock. Since then my research has led me to the RSI Index. The RSI Index is a matatical indicator that allows investors to determine the Relitive Strength of a company (hence why it's called the RSI Index). The RSI is calculated with the following equation...

100-100/(1+RS)
RS = Number of Days it closes positively and negatively

The RSI index is out of 100 total points and the more points a company has, the more overbought the company's stock is. Stocks with a lower RSI value have a stronger potential to become profitable. Traders should be aware that large increases or decreases in a company's stock will severely affect the company's RSI value and it won't be as accurate.

Based on my experience with using equations to determine stock prices, I don't trust the calculations as much as when I watch the company's individual price over a certain period of time. I like to do my research by looking at what days, months, hours a company's stock is the highest. I also like to read about a company's current events and quarterly reports; but besides that I would never personally trust an equation to do my own research.