- Ever wondered why the stock you are holding is not moving when the market is ripping higher?
Ex: ITC didn't move btwn June’20 & Feb’22 while the market rallied
This indicator will help you get rid of such underperforming stocks.
The Ultimate Guide to ‘RELATIVE STRENGTH (RS)’...🎯
WAIT… This is NOT RSI that you use day in & out…
Rather a very IMPORTANT indicator that can CHANGE the way YOU trade/invest…🤓
So, hang on as I explain this with #TATASTEEL chart...
Let’s go 🧵…
- Ever wondered why the stock you are holding is not moving when the market is ripping higher?
Ex: ITC didn't move btwn June’20 & Feb’22 while the market rallied
This indicator will help you get rid of such underperforming stocks.
When stock A goes...
- up faster than Nifty, it is STRONG/OUTPERFORMING relative to Nifty
- down faster than Nifty, it is WEAK/UNDERPERFORMING relative to Nifty
So, RS is relative performance of a stock compared to any benchmark (refer chart for example)
A stock is outperforming/strong when
- Nifty is going up, but the stock is going up much faster than Nifty
- Nifty is going down, but the stock is going down much slower than Nifty or going up
A stock is underperforming/weak when
- Nifty is going down, but the stock is going down much faster than Nifty
- Nifty is going up, but the stock is going up lesser than Nifty or going down
- If a stock has gone up from 100 to 500 in the last 6 months & Nifty has gone up from 10000 to 15000 in the last 6 months, then you can say the stock has gone up 5 times & Nifty has gone up only 50%.
This shows that the RS of the stock is Strong
- Ex: stock price @ 100 & Nifty @ 10k
- Divide the stock price/Nifty
- 100/10000=0.01
- To make it easily understandable, let’s multiply this by 100. So, 0.01*100=1.
So, this is what we did.
RS = (Stock Price/Nifty Price) * 100 = (100/10000)*100 = 1
If you continue to do the above every day until the stock reaches 500 & Nifty reaches 15000 & if you plot it in a graph with the ratio on the y-axis & time on the x-axis, y'll notice a rising line chart
This tells you stock is clearly outperforming Nifty
If the stock is not going up as much as Nifty or if the stock is going down when Nifty is going up, then you will see a line/graph chart where the trend is down, as shown below.
- Let's add a 52 week exponential moving average(red line) of the RS that will help us understand RS trend of the last 1 yr
- The red line is much smoother & shows that the average RS was in a strong downtrend before trending up.
- If the RS is above the 52 wk MA(red line), this signals that the RS is moving higher or the stock is outperforming Nifty.
- If the RS is below the 52 wk MA(red line), this signals that the RS is moving lower or the stock is underperforming Nifty.
- In the below chart, around Line 1, the price remained flat but RS kept rising - outperformance.
- Later the stock price also broke out from consolidation & started a long term uptrend that lasted for 2 long years from 2016 to 2018.
- In '18 after a 2 yr strong uptrend (Line 2), RS went below the red line & the stock price also broke down from an uptrend & started heading lower.
- Since, '18 RS line has always stayed well below the red line indicating underperformance
- In '20 crash (Line 3), the RS was flat while price went down to 250
- RS remained flat coz price fell lesser than Nifty
- In Nov’20 price broke the downtrend & went higher & RS crossed red line too
- Since that breakout Tatasteel has outperformed Nifty
- If you stayed till here, here is the indicator code
https://t.co/olLhe4Ki2g - create a new indicator in Tradingview(TV)
- If you don't know how to create a TV indicator then just search for this indicator in TV or just find the one that suits you
1. Retweet the first tweet https://t.co/cTgz3CKHaw
2. Follow @dmdsplyinvestor
3. Subscribe to my YouTube channel for more content! https://t.co/yNCTzHVRsy
The Ultimate Guide to \u2018RELATIVE STRENGTH (RS)\u2019...\U0001f3af
— Trendline Investor (@dmdsplyinvestor) September 1, 2022
WAIT\u2026 This is NOT RSI that you use day in & out\u2026
Rather a very IMPORTANT indicator that can CHANGE the way YOU trade/invest\u2026\U0001f913
So, hang on as I explain this with #TATASTEEL chart...
Let\u2019s go \U0001f9f5\u2026 pic.twitter.com/WOJK33NorT
More from Trendline Investor
STOCK TRADING STRATEGIES to get started today...💸
Here are 6⃣ simple strategies which you can use if you are still struggling to trade cash stocks!
They are very simple yet very effective if you can stick to them🤓
Ready to learn?
Let's go🧵...
1⃣ CCI & Pivot based strategy to ride massive trends in stocks
Don't forget to checkout the fundamental
2⃣ Multi-time frame positional strategy based on CCI with
3⃣ Only CCI based investment strategy - You can catch massive trends in stocks with good Sales/PAT growth using this
4⃣ Tradingview code for strategy shared by @heartwon based on the long term and short term
Here are 6⃣ simple strategies which you can use if you are still struggling to trade cash stocks!
They are very simple yet very effective if you can stick to them🤓
Ready to learn?
Let's go🧵...
1⃣ CCI & Pivot based strategy to ride massive trends in stocks
Don't forget to checkout the fundamental
For 7 yrs I struggled to ride trends..
— Trendline Investor (@dmdsplyinvestor) April 30, 2022
& in 2015-17 when I started learning TA smthng crazy happened..
Here is a simple strategy that helped me..
\u2022 Identify turning points in stocks
\u2022 Find quality stocks
\u2022 Not panic & ride trends
\u2022 Finally make \U0001f4b8
CCI & Pivot Strategy\U0001f9f5.. pic.twitter.com/S0QFx00541
2⃣ Multi-time frame positional strategy based on CCI with
There are 1000s of indicators in Technical Analysis...
— Trendline Investor (@dmdsplyinvestor) May 12, 2022
But you need to MASTER ONLY ONE\U0001f3afto win in markets...
I selected 'Commodity channel index' (CCI) as my PRIMARY INDICATOR & all my scanners are a variation of this...
MULTI TIMEFRAME POSITIONAL STRATEGY using CCI...\U0001f9f5 pic.twitter.com/4O2PrBxSw9
3⃣ Only CCI based investment strategy - You can catch massive trends in stocks with good Sales/PAT growth using this
My CCI based investment strategy - How does it work? A thread.
— Trendline Investor (@dmdsplyinvestor) May 23, 2020
Objective: Identify stocks that are entering a phase of momentum on the upside and ride the stock until momentum weakens.1/n
4⃣ Tradingview code for strategy shared by @heartwon based on the long term and short term
A brilliant concept based on the long term and short term EMA by @heartwon. I'm here on twitter for such stuff that helps me build my systems. Really good one. Here is the trading view indicator that I coded. Please RT for everyone's benefit. 1/3 https://t.co/uleWiysyL1
— Trendline Investor (@dmdsplyinvestor) July 5, 2020
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1/“What would need to be true for you to….X”
Why is this the most powerful question you can ask when attempting to reach an agreement with another human being or organization?
A thread, co-written by @deanmbrody:
2/ First, “X” could be lots of things. Examples: What would need to be true for you to
- “Feel it's in our best interest for me to be CMO"
- “Feel that we’re in a good place as a company”
- “Feel that we’re on the same page”
- “Feel that we both got what we wanted from this deal
3/ Normally, we aren’t that direct. Example from startup/VC land:
Founders leave VC meetings thinking that every VC will invest, but they rarely do.
Worse over, the founders don’t know what they need to do in order to be fundable.
4/ So why should you ask the magic Q?
To get clarity.
You want to know where you stand, and what it takes to get what you want in a way that also gets them what they want.
It also holds them (mentally) accountable once the thing they need becomes true.
5/ Staying in the context of soliciting investors, the question is “what would need to be true for you to want to invest (or partner with us on this journey, etc)?”
Multiple responses to this question are likely to deliver a positive result.
Why is this the most powerful question you can ask when attempting to reach an agreement with another human being or organization?
A thread, co-written by @deanmbrody:
Next level tactic when closing a sale, candidate, or investment:
— Erik Torenberg (@eriktorenberg) February 27, 2018
Ask: \u201cWhat needs to be true for you to be all in?\u201d
You'll usually get an explicit answer that you might not get otherwise. It also holds them accountable once the thing they need becomes true.
2/ First, “X” could be lots of things. Examples: What would need to be true for you to
- “Feel it's in our best interest for me to be CMO"
- “Feel that we’re in a good place as a company”
- “Feel that we’re on the same page”
- “Feel that we both got what we wanted from this deal
3/ Normally, we aren’t that direct. Example from startup/VC land:
Founders leave VC meetings thinking that every VC will invest, but they rarely do.
Worse over, the founders don’t know what they need to do in order to be fundable.
4/ So why should you ask the magic Q?
To get clarity.
You want to know where you stand, and what it takes to get what you want in a way that also gets them what they want.
It also holds them (mentally) accountable once the thing they need becomes true.
5/ Staying in the context of soliciting investors, the question is “what would need to be true for you to want to invest (or partner with us on this journey, etc)?”
Multiple responses to this question are likely to deliver a positive result.
