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Automated-Trading 2014.06.11 11:11 

Random Walk Index:

The Random Walk Index indicator is used in situations where it is necessary to determine whether the market instrument is in a developing trend or performs random motion in a trading range.

This indicator tries to do it by defining a trading range of the market instrument first. The next step is to calculate a series of RWI indices for a maximum of the analyzed period. The greatest movement of the index relative to RW is used as the current index. The market develops an uptrend, if RWI of highs>1, while the downtrend is when RWI of lows>1.

Figure 1. The RWI indicator

Author: Nikolay Kositsin

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