Formula
change = C - C[t-1]; gain = max(change, 0); loss = max(-change, 0)
avgGain(first) = SMA(gain, N); avgLoss(first) = SMA(loss, N)
avgGain = (avgGain[t-1] * (N - 1) + gain) / N (same for avgLoss)
RSI = 100 - 100 / (1 + avgGain / avgLoss); RSI = 100 when avgLoss = 0How TraderAI calculates it
TraderAI uses Wilder's method on closing prices with a default length of 14. The first average gain and average loss are simple averages of the first 14 price changes; every later value is smoothed with Wilder's formula. The first RSI value appears after 15 candles. When a window contains no losses at all, RSI is exactly 100.
Live example
How traders read it
Readings above 70 and below 30 are the conventional overbought and oversold zones. They mark stretched momentum, not an automatic reversal.
In a strong trend RSI can stay above 70 or below 30 for a long time, so many traders watch the 50 line as a simple momentum bias instead.
A divergence, where price makes a new high or low but RSI does not, shows that the momentum behind the move is fading.
Limitations
- RSI only uses closing prices, so it ignores the range inside each candle and volume.
- The 70 and 30 levels are conventions; the levels that matter differ between markets and timeframes, and no single reading is a signal on its own.
Settings and defaults
| Setting | Default | Allowed range |
|---|---|---|
| Period | 14 | 2 to 100 |
What it plots
Drawn in its own pane below the price chart, with its own scale.
| Line | Unit | Drawn as | First value |
|---|---|---|---|
| Value | Percent | Line | after 15 candles |
Questions
What is RSI?
The Relative Strength Index (RSI) compares the size of recent closing gains with recent closing losses on a scale from 0 to 100. Readings near 100 mean almost every recent move was up; readings near 0 mean almost every recent move was down. It describes momentum, not value.
How does TraderAI calculate RSI?
TraderAI uses Wilder's method on closing prices with a default length of 14. The first average gain and average loss are simple averages of the first 14 price changes; every later value is smoothed with Wilder's formula. The first RSI value appears after 15 candles. When a window contains no losses at all, RSI is exactly 100.
What are the default settings of RSI?
The defaults are Period: 14. You can change every setting on the live chart.
Can I use RSI for free on TraderAI?
Yes. Every indicator in the library can be added to the free live chart. The free plan keeps up to 2 indicators active at the same time; Pro lets you combine more on one chart.
Educational content. Indicators describe past prices; they do not predict future prices and are not investment advice.