Lets investigate a trading strategy. In this post we’ll cover a strategy called RMI. We will explain the logic and later we’ll include examples and cover some back testing.
What is RMI
The Relative Momentum Index (RMI) — a moving average-based overbought/oversold indicator that can remain overbought or oversold for much longer periods than its fellow members of the oscillator family — is a factor we often consider when forming trade recommendations. Unlike the more commonly observed Relative Strength Index (RSI), which measures short-term instances in which stocks are overbought (or oversold) that might cause a temporary interruption in the prevailing trend, a high RMI level can often be an indicator of a positive price trend that can persist for many months.