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RSL Classic MT4

This is the classic "Relative Strength Levy" (RSL) indicator according to Dr. Robert Levy's study called "The Relative Strength Concept of Common Stock Price Forecasting" which was released as a hardcover-book in the late 60's of the last century.


Key Concept

  • Use this indicator on several instruments to compare their relative strength: Values resulting from analysis will oscillate around a value of 1
  • The strongest instruments will have the highest RSL values (above 1) and the weakest instruments will have the lowest RSL values (below 1)
  • You might want to buy the strongest instruments (highest RSL values) and sell the weakest instruments (lowest RSL values) to follow trends


Inputs

  • Name of Asset to Analyze - name of the asset exactly as shown in the Market Watch window (i.e. EURUSD, GDAXI, XAUUSD,...)
  • MA Periods - length of the look-back period (bars) to be used for the calculations (values >=10 recommended)
  • MA Mode - averaging mode from the dropdown menu (Simple, Exponential, Smoothed, Linear Weighted)
  • Applied Price - applied price from the dropdown menu (Close, Open, High, Low, Median, Typical, Weighted)
  • Color - change the color of the chart to fit your favorite color scheme in your individual templates


Features

  • Works on all timeframes
  • Works for all instruments that are available in the Market Watch window of your MetaTrader 4
  • Output value from the buffer is shown in the seperate indicator window and in the Data Window
  • The indicator can be used in Expert Advisors using the iCustom() function for automated trading systems


How Dr. Levy used the RSL

Dr. Levy analyzed 200 stocks of the US market (think of the S&P 200 stocks) on a weekly timeframe, and used the output value of his RSL indicator to rank the stocks from strongest (highest RSL values >1) to weakest (lowest RSL values <1). From this resulting ranking list, he bought the Top 5% to 7% of stocks with the highest RSL reading. After a week, he analyzed all of the 200 stocks again, and then re-ranked them according to their RSL reading.

If a stock dropped into the lower 31% of that re-ranked list (he called that "Cast-Out-Rank") he sold the stock, and then redistributed the free capital again amongst the Top 5% to 7% of the latest ranking. This way he was always invested in the strongest stocks available, and re-allocated his capital on a weekly basis according to the RSL ranking list. This is a classic "Momentum" approach and is recommended for medium-term to long-term investors.
Caution: Do not confuse this RSL indicator with the "Relative Strength Index" (RSI) by Welles Wilder please! This one here is different!

This here is the MetaTrader 4 version of the classic RSL. The version for MetaTrader 5 will follow, as well as modified versions of the classic RSL with additional features.


Author

Original concept by Dr. Robert A. Levy (1968), coding for MetaTrader 4 by René Patrick Sauerwein (2018)

Cornelis Duiker
1478
Cornelis Duiker 2018.07.26 04:09 
 

A good addition to any portfolio. Drag several Symbols onto one charts (ie EURUSD, EURGBP, EURCHF, EURAUD) if they are all above 1, its a safe bet to be stay long on EUR. You can wait until a couple indicators drop to 1, or Take Profit when you feel like it.

if you wait till the indi goes back to 1, you'll end up with roughly no profit, OR if it has caught a good trend, the profit can be good. A 50/50 with either small losses, or bigger profit is a good bet in my books.

It needs to be on a high TF, forget about any minute time frame.