Direct Answer
John Ehlers' oscillator based on the idea that closes tend to be higher than opens in uptrends and lower in downtrends. It divides a smoothed close-minus-open by a smoothed high-minus-low range. Positive values mean closes have tended to finish above opens, indicating upward vigor, and negative values the reverse.
Relative Vigor Index: Formula, Meaning, Signals, Examples and How to Use It
How Is Relative Vigor Index Calculated?
John Ehlers' oscillator based on the idea that closes tend to be higher than opens in uptrends and lower in downtrends. It divides a smoothed close-minus-open by a smoothed high-minus-low range.
Formula: RVI = Sum(smoothed(Close - Open), n) / Sum(smoothed(High - Low), n), where smoothing is commonly a symmetric 4-bar weighting
Inputs:
- Open, high, low and close of each bar
- Smoothing weights (commonly 1, 2, 2, 1 over four bars)
- Window length n (10 is common)
- A short smoothed signal line
Worked example. If the smoothed body sum over the window is 3.0 and the smoothed range sum is 5.0, the RVI is 0.60. The inputs are illustrative numbers, not market data.
Reading it. Positive values mean closes have tended to finish above opens, indicating upward vigor, and negative values the reverse. Crossings of the RVI line and its signal line are the typical events.
Limits. It depends on open prices, which for some markets are unreliable or gap-affected. The smoothing adds lag, and details differ between implementations.
What is Relative Vigor Index?
John Ehlers' oscillator based on the idea that closes tend to be higher than opens in uptrends and lower in downtrends. It divides a smoothed close-minus-open by a smoothed high-minus-low range.
How to use Relative Vigor Index
Positive values mean closes have tended to finish above opens, indicating upward vigor, and negative values the reverse. Crossings of the RVI line and its signal line are the typical events. A reading alone is never a buy or sell signal; it needs context from price structure, volume, volatility and the broader market regime.
Strengths
- Dividing the smoothed body by the smoothed range normalizes each bar's directional move by how much room price had, so quiet and active bars are comparable.
- The symmetric 1, 2, 2, 1 weighting centers the smoothing on the middle bars, and a short signal line supplies crossovers.
- Reproducible when the formula and data convention are fixed.
Weaknesses and limitations
- A bar that opens at its low and closes at its high scores at the maximum however small its range was.
- The ratio describes bodies relative to ranges only, so a run of small bodies in a persistent move reads about the same as a noisy small rise.
- Correlated indicators can create false confidence by repeating the same underlying information.
Editorial and risk note
This page is educational content, not individualized investment advice. It should not imply guaranteed prediction, accuracy or outperformance.
Frequently Asked Questions
Is Relative Vigor Index a buy or sell signal?
No. Positive values mean closes have tended to finish above opens, indicating upward vigor, and negative values the reverse. It depends on open prices, which for some markets are unreliable or gap-affected. A trade built on it still needs a trigger, an invalidation rule, a position size and realistic execution assumptions.
What is the best setting for Relative Vigor Index?
Relative Vigor Index takes these inputs: open, high, low and close of each bar; smoothing weights (commonly 1, 2, 2, 1 over four bars); window length n (10 is common). There is no universal best setting for the tunable ones, so test them across instruments, regimes and out-of-sample periods and favor stable parameter regions over one historical winner.
Can Relative Vigor Index be used by itself?
It depends on open prices, which for some markets are unreliable or gap-affected. The smoothing adds lag, and details differ between implementations. For that reason it is read next to measures of direction, participation, valuation, liquidity and risk, not alone.
Does Relative Vigor Index work on every timeframe?
The calculation (RVI = Sum(smoothed(Close - Open), n) / Sum(smoothed(High - Low), n), where smoothing is commonly a symmetric 4-bar weighting) can be run on any bar size, but behavior is not portable: a reading on a five-minute chart describes a very different market window from the same reading on a daily chart. Validate the exact timeframe before relying on it.
Why does Relative Vigor Index give false signals?
A bar that opens at its low and closes at its high scores at the maximum however small its range was. The ratio describes bodies relative to ranges only, so a run of small bodies in a persistent move reads about the same as a noisy small rise. Lag, noise and regime changes add to this, because market participants react to new information after the reading is calculated.
How should Relative Vigor Index be backtested?
Rebuild Relative Vigor Index from open, high, low and close of each bar using point-in-time data, write the rules before testing, include delisted securities where relevant, model realistic fills and costs, reserve a validation sample and compare with a simpler baseline.