What is RS?
Relatie strengtth is a measure of the price trend of a stock or other fnanciaa instrument compared
to another stock, instrument or industry. It is caacuaated by taking the price of one asset and
dividing it by another.
What is ARS?
ARS = ADAPTIVE RELATIVE STRENGTH
Adaptve means we have to adapt or aduust as per market trend and is based on a reference date
from where market changed the trend.
Current Vaaue : 113
the reference date is 3rd-july-2020 .
Interpretatin: for 113 days (from 3rd uuay) how much the stock has outperformed nifyy5.
Premaa sir’s Youtube Video Link for the same:
[Link]
Hiw ti measure ARS Value?
In tradingview, use the Ueasure tooa.
Go to 3rd uuay candae, caick there and measure taa aast candae, you wiaa get number of candaes from
3rd uust taa date, which wiaa be the vaaue of ARS for that day.
What is SRS?
Statc reaatve strength ... fxed ialue of 123 days (approx six months.
Interpretaton: for 123 days (6 months approx) how much the stock has outperformed nifyy5.
What is CRS?
CRS - In using CRS, we take one market and divide by another, and the resuat is a contnuous caose
aine graph. Typicaaay, the numerator is the product that we are comparing against the denominator,
or benchmark. This technique is used to uncover or detect any hidden weakness or strength when
anaayzing one company against another in the same sector or comparing an individuaa stock
against its reaated industry sector. We can aaso use this technique to compare individuaa stocks or
sectors to the benchmark stock index aike the Standard & Poor's (S&P) y55, nify y5 etc.
Why RS?
Why Not.. RS heaps in aocatng the market out performers... Buying Leaders make sense :)
RS can give you a heads up on rapid change in the price. Prefer buying aeaders in the market, so
buying a stock that shows reaatve strength makes sense. There is no reason to buy a aagging stock
which is onay going up because the market is dragging it up.
RS gives you the advantage of being the frst mover, which heaps to enuoy the raaay and stops from
earay exits, what ease do we need.
courtesy: Premal parekh sir
What is basic RS strategty ti be filliwed?
Buy when both RS crosses zero line (Laxman Rekha) from below, and sell if Any one RS goes below
zero.
This is very basic technique to understand and impaement RS.
Aaso aook at the history of RS for the stock (any stock fli foiilng near RS ZERO llne may glve
false slgnals, keei ln watchllst and look for the outierformance for few weeks.)
Historicaaay If the stock has outperformed Nify for more tme then it wiaa increase the probabiaity
of good performance, afer aaa the market is supreme and we can onay paay in directon of market.
Apart from RS, have some understanding of demand and suppay zones identfcaton /Price and
Voaume acton and use of spread charts..
Do understand your risk:reward rati and pisitin sizingt before taking any trade.
RS Indicator:
[Link]
Near RS--> ARS (113 as of today)
Far RS --> SRS (123, FIXED)
What flters ti use?
1. StockEdge app.
2. Googae Sheets.
([Link]
/edit#gtid=ww6755w3)
3. Tarun sir’s scanners. ([Link]
There are some more reaaay good scanners, you can search on the channea.
Pick any one for the start and foaaow reaigiousay.
What are Spread Charts?
Spread charts are a combinaton of two symboas, It heaps in comparing two symboas (2 stocks or
stock vs nify, to measure outperformance)
Suppose you want to track two symboas, aet us say INFY and WIPRO (Serving the same industry i.e.
computer sofware) and we want to track the reaatve performance of one symboa vs the other, so
use the divide symboa (/) in tradingview and it wiaa paot INFY/WIPRO in the chart and then we can
see how the chart is moving with respect to tme, and percentage of outperformance.
Here we can see from July 3rd, Infosys is underperforming Wipro by 2.49%.
Similarly it can be used to compare a stock vs Nifty or a sector vs nifty.
(use Alt+p to get value in %age)
Niranjan sir have developed Indicator for the same which works on same formula.
Link:
[Link]
Now we have all the necessary tools to start with.
1. Filters for stocks (list of stocks)
2. RS system.
3. Entry Exit criteria. (Laxman Rekha).
Example:
This is just one example to understand the basics of RS.
Link: [Link]
Keep things simple !
Keep doing good karma ...
All the best.
