Direct Answer
True Strength Index is a momentum measure used to measure the speed, persistence, or relative intensity of recent price movement. The production page must define the exact calculation convention before interpreting higher or lower readings, because platform and provider implementations can differ.
True Strength Index: Formula, Meaning, Signals, Examples and How to Use It
How Is True Strength Index Calculated?
William Blau's TSI divides the double-smoothed price change by the double-smoothed absolute price change. The ratio is a smoothed momentum oscillator centered on zero, scaled from -100 to +100.
Formula: TSI = 100 * EMA(EMA(dC, 25), 13) / EMA(EMA(|dC|, 25), 13), where dC is the one-bar close change
Inputs:
- Closing prices
- Long smoothing period (25 is the common default)
- Short smoothing period (13 is the common default)
- Optional signal line
Worked example. With a double-smoothed price change of 1.8 and a double-smoothed absolute change of 6.0, the TSI is 30.0. The inputs are illustrative numbers, not market data.
Reading it. Positive values mean smoothed momentum is up and negative values down; crossings of zero and of a signal line are the typical events. Readings are bounded, so extremes show strongly one-sided price changes.
Limits. Double smoothing causes lag, so crossings come after price has moved. Results depend on both smoothing periods, and it gives little information in flat markets.
Indicator overview
| Attribute | Value |
|---|---|
| Category | Momentum |
| Asset classes | Stocks, ETFs, Indexes, Futures, Forex, Crypto, Commodities |
| Output type | Ratio/index/scalar |
| Parameters | Varies by implementation; document exact settings on use |
What is True Strength Index?
True Strength Index is a momentum measure used to measure the speed, persistence, or relative intensity of recent price movement. The production page must define the exact calculation convention before interpreting higher or lower readings, because platform and provider implementations can differ.
For Swoopr, the canonical profile separates definition, calculation, interpretation and decision use. That keeps readers from collapsing a descriptive metric into a trading strategy. An indicator can describe trend, momentum, volatility, participation, positioning or risk without providing a complete entry, exit, sizing or portfolio decision.
What does it measure?
True Strength Index measures specific market properties in the Momentum domain. The practical value is repeatability: the same inputs and formula can be applied across a defined dataset, allowing users to compare readings through time or across instruments when the calculation convention is held constant.
How to read True Strength Index
Interpretation depends on the market property being measured. A descriptive reading is not automatically predictive. The same numerical state can lead to different outcomes in a strong trend, quiet range, event-driven gap or illiquid market. Always combine with context from price structure, volume, and broader market regime before drawing conclusions.
Strengths
- Dividing the double-smoothed move by the double-smoothed absolute move expresses direction as a share of total movement, bounded by minus 100 and plus 100.
- Smoothing the numerator and denominator in the same way keeps the ratio from being distorted by the smoothing itself.
- Reproducible when the formula and data convention are fixed.
Weaknesses and limitations
- The 25 and 13 defaults are conventions set for daily bars, and weekly or intraday bars are not rescaled to match.
- Because the ratio is net over total, a run of tiny same-direction moves reads as high as a run of large ones, hiding the size of the move.
- 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. Where multiple valid definitions exist, Swoopr states the alternatives and the reason for selecting its primary convention.
Frequently Asked Questions
Is True Strength Index a buy or sell signal?
No. Positive values mean smoothed momentum is up and negative values down; crossings of zero and of a signal line are the typical events. Double smoothing causes lag, so crossings come after price has moved. 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 True Strength Index?
True Strength Index takes these inputs: closing prices; long smoothing period (25 is the common default); short smoothing period (13 is the common default). 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 True Strength Index be used by itself?
Double smoothing causes lag, so crossings come after price has moved. Results depend on both smoothing periods, and it gives little information in flat markets. For that reason it is read next to measures of direction, participation, valuation, liquidity and risk, not alone.
Does True Strength Index work on every timeframe?
The calculation (TSI = 100 * EMA(EMA(dC, 25), 13) / EMA(EMA(|dC|, 25), 13), where dC is the one-bar close change) 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 True Strength Index give false signals?
The 25 and 13 defaults are conventions set for daily bars, and weekly or intraday bars are not rescaled to match. Because the ratio is net over total, a run of tiny same-direction moves reads as high as a run of large ones, hiding the size of the move. Lag, noise and regime changes add to this, because market participants react to new information after the reading is calculated.
How should True Strength Index be backtested?
Rebuild True Strength Index from closing prices 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.