RSX indicator is a powerful
VertexFX client-side oscillator that identifies market cycles and reversals in
market trends. It is used in conjunction with other indicators to provide entry
and exit signals.
The concept behind the RSX indicator is the
method applied to calculate the Relative Strength Index (RSI). Unlike RSI,
which uses closing prices, this indicator uses High and Low prices. Additional
smoothing is applied, and the lag is removed to provide fast response to change
in direction.
The RSX indicator is an oscillator
within the range of 0 to 100. When the indicator values are low (below 30), the
market is considered oversold. Similarly, when the indicator value is high
(above 70), the market is considered overbought. In the first step, we calculate
the range between the High and the Low values. This value is then smoothed over
the recent LENGTH bars using the smoothing factor. The smoothing factor is
calculated by dividing 3 (three) with the sum of LENGTH and 2 (LENGTH + 2).
In the next step, we calculate the
RSX using the relative strength over the recent LENGTH periods.
The Relative Strength is calculated by
dividing the sum of up-closes by the sum of down closes. When the market is
trending up, the RSX value gradually rises. When the market exhibits weakness
and tops out, the value of RSX tops out and starts falling. On the contrary,
when the market is trending down, the RSX value falls gradually.Finally, when
the market bottoms out and exhibits strength, the value of RSX also bottoms out
and starts rising. These identify the turning points in the market.
SELL: Place Sell trade when the
RSX indicator has topped out above 70 and is falling for at least 3 bars. Do
not open sell trade if the candle has gap-down opening. Place stop-loss above
the nearest Swing High level
BUY: Place Buy trade when the RSX
indicator has bottomed out below 30 and is rising for at least 3 bars. Do not
open buy trade if the candle has gap-up opening. Place stop-loss below the
nearest Swing Low level
To use RSX indicator download
it from here, then place it at VertexFX VTL directory:
C:\ProgramData\VertexFX Client
Terminals\"Company name"\VTL10\Local VTL Scripts
Then right click on the tree and
select refresh or restart your client station and you will find under VTL local scripts in your client terminal.
You can check this video that
talks RSX indicator: