The Relative Vigor Index (RVI) gives buy-sell signals related to financial assets and was created by John Ehlers.
The RVI indicator is created using the 10-period moving average. It can also be explained as an indicator in which the expectations of the trend and oscillator meet. However, it should not be forgotten that, like other indicators, decisions on buying and selling should depend on multiple indicators. Although the name is similar to the Relative Strength Index (RSI), usage behavior is more similar to the ADX indicator.
In order to reach the Relative Vigor Index indicator in the MetaTrader platform, you can respectively click on Toolbar, Insert, Indicator, then click “Oscillator”.
Before adding this indicator to the platform, you can revise or make the number 10 shared as standard, in line with how many averages of prices must be taken suitable to the financial asset that is to be bought or sold. You may also revise from the “Parameters” section whenever you’d like. However, in the training, such change won’t be made and the standard pattern will be followed. Also, in this section, there is RVI Style representing the mainline and the signal line (Signal Line Style) that we will consider as an element of confirmation for trading.
The Positive Or Negative Condition of the RVI Indicator!
For the Relative Vigor Index (RVI) indicator to create a BUY signal for any asset, the green line we call RVI Style needs to cut the red line we call Signal Line Style downwards. Only with this condition can the negative expectation of the financial asset be at the forefront.
For the Relative Vigor Index (RVI) indicator to create a SELL signal for any asset, the green line we call RVI Style needs to cut the red line we call Signal Line Style upwards. Only with this condition can the positive expectation of the financial asset be at the forefront.
Here, the first one of the two most important things to know is to never use an indicator alone. The BUY-SELL decision, in particular, must be supported by supportive tools.
The second and most important detail is whether the trend expectation supports the relevant transaction type when the indicator gives a BUY or SELL signal. This means there is an important risk distinction between the indicator giving a BUY signal and a SELL signal when it is following an upward trend. In the strategies standing next to the trend, the risk parameter decreases; while opening a position that is anti-trend, the risk parameter will increase. We observe that in the upwards and downwards trends in the graphic above, when decisions are made only in line with the appearance of the trend, there is a success; when the positions are anti-trend, success decreases.