The Relative Vigor Index — The Full Guide.
Coding the Relative Vigor Index in Python.
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Another famous and relatively complex indicator will be discussed in this article. It is a contrarian oscillator that is best used in ranging markets. I am of course talking about the Relative Vigor Index. In this article, we will present the fundamentals and how to code it.
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The Building Blocks
The Relative Vigor Index is composed of many building blocks, namely the totality of OHLC data and moving averages. It seeks to measure the strength of the trend by comparing the ranges between the open/close and high/low values. It is an unbounded indicator that oscillates around the zero line with many strategies possible to be formed using it, namely divergences and crosses.
The numerator line of the Relative Vigor can be calculated this way:
- Calculate the current difference between the closing and opening price. Let’s call this variable A.
- Calculate the difference between the current closing price and the opening price from one period ago. Let’s call this variable B. Multiply the result by 2.
- Calculate the difference between the current closing price and the opening price two periods ago. Let’s call this variable C. Multiply the result by 2.
- Calculate the difference between the current closing price and the opening price three periods ago. Let’s call this variable D.
The denominator line of the Relative Vigor can be calculated this way:
