The formula of relative strength wanted.

Relative strength is an indicator developed by Murphy and popularised by O'Neil. It compares a stock's strength to the general market, and the reading ranges from 1 to 99. The higher means the stock is stronger.

I want to ask: anyone knows its formula?

GCC said:

Relative strength is an indicator developed by Murphy and popularised by O'Neil. It compares a stock's strength to the general market, and the reading ranges from 1 to 99. The higher means the stock is stronger.

I want to ask: anyone knows its formula?

Click to expand...

Relative Strength is simply average gains divided by average losses.

Did you mean the index itself?

HowardCohodas said:

RSI Indicator

Click to expand...

No, I am afraid it is not what I am looking for. Relative Strength is NOT the same as RSI. RSI is a simple indicator developed by Wilder. On the other hand, relative strength is the indicator used by William O'Neil in his famous newspaper Investor's Business Daily.

More info here:

http://stocks.about.com/od/evaluatingstocks/a/Relsten050505.htm

TheBramble said:

Relative Strength is simply average gains divided by average losses.

Did you mean the index itself?

Click to expand...

This could be what I am looking for. Is there any example of how it is calculated?

OK, I have finally figured it out:

Relative Strength is obtained by dividing the stocks price with a benchmark index (e.g. S&P 500) over the last 4 quarters, with 40% weight for the most recent quarter and 20% for each of the remaining quarters.