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RVI – Binary Options göstəriciləri
The RVI indicator ( Relative Vigor Index ) is a pretty good indicator which can be used in various ways to identify reversals. I developed a way to
Relative Vigor Index (RVI) – Definition of Relative Vigor Index (RVI) on Investopedia – An indicator used in technical analysis that measures the conviction of a recent …
Relative Vigor Index (RVI) The main point of Relative Vigor Index Technical Indicator (RVI) is that on the bull market the closing price is, as a rule, higher, than the …
Edited RVI indicator – : custom indicators for MT4
Binary Options Indicators – Download Instructions
RVI is a Metatrader 4 (MT4) indicator and the essence of the forex indicator is to transform the accumulated history data.
RVI provides for an opportunity to detect various peculiarities and patterns in price dynamics which are invisible to the naked eye.
Based on this information, traders can assume further price movement and adjust their strategy accordingly.
How to install RVI.mq4?
- Download RVI.mq4
- Copy RVI.mq4 to your Metatrader Directory / experts / indicators /
- Start or restart your Metatrader Client
- Select Chart and Timeframe where you want to test your indicator
- Search “Custom Indicators” in your Navigator mostly left in your Metatrader Client
- Right click on RVI.mq4
- Attach to a chart
- Modify settings or press ok
- Indicator RVI.mq4 is available on your Chart
How to remove RVI.mq4 from your Metatrader Chart?
- Select the Chart where is the Indicator running in your Metatrader Client
- Right click into the Chart
- “Indicators list”
- Select the Indicator and delete
Click here below to download the Binary Options Indicators:
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Binary Options With The Relative Vigor Index
What is the Relative Vigor Index?
This educational project on Binary Options Academy is about trading with technical indicators, and this time we are looking at one of the most visible technical indicator: the Relative Vigor Index.
The platform used here is the Jforex platform and the indicator is to be found under the momentum indicators, but if you we’re to use for charting purposes the Metatrader, then the indicator is to be found also on the momentum indicators.
Main Advantages in Using the RVI
The advantage of this indicator is that it has a so called Signal Line, and therefore we should guide our entries, or the striking prices, based on the signals received.
The RVI (Relative Vigor Index) is an oscillator and therefore it is being applied on the bottom of a chart and its main advantage is that it is extremely visible and simple to understand and interpret.
It comes with an overbought and oversold area like any oscillator and this means that call options should be bought by the time the oversold territory is reached while put options should be traded by the time the overbought territory is reached.
However, this is mostly valid in ranging environments as in ranges market is often giving conflicting signals. How to make the distinction between a market that is ranging and one that is travelling in an impulsive move in order to avoid being trapped on the wrong side of a trade?
One answer is coming from the Signal Line mentioned a bit early as, if market is reaching the overbought territory and the Signal Line is moving below the main average and this shows market is turning and put options should be traded. However, if the oscillator is not reaching the oversold territory and the Signal Line is crossing again, this time on the bullish side, so to the upside, call options should be traded and this time more aggressively as it means that the previous signal was a fake one.
Searching for Divergences
Another thing that can be used with the RVI oscillator is to look for divergences price is making when compared with the oscillator. A bullish divergence is always being considered when price is making two separate and consecutive lows while the oscillator is not confirming those lows. In this case, call options are recommended with the expiration date being adjusted to the time frame the oscillator is being placed on.
The same is valid in a bearish divergence, as if price is making two consecutive higher highs but then the oscillator is failing to make the second one (it is being called that is not confirming what price is doing), put options are recommended with the appropriate expiration date.
But even when price is showing a divergence, when is the moment to enter into a trade or, to talk in binary terms, what should be the perfect striking price?
It is being given by the same Signal line as when it is crossing below the main moving average it is showing bearish conditions so put options are being favored and when it is crossing above the moving average it is showing bullish conditions, so call options should be traded.
The Relative Vigor Index oscillator is to be found on the Metatrader platform if you click the Insert tab, then move to Indicators, and under the Oscillators category the RVI is right after its “brother”, the RSI (Relative Strength Index). Choosing the indicator and clicking ok will result in having the main window split into the main one, where price is, and a smaller one, where oscillator is travelling.
However, it should be mentioned that the RVI is not only used as a classical oscillator as it can be used as a trend indicator as well. It is strongly recommended not to consider a contrarian trade as long as the Signal Line is not crossing above/below the main average as it is usually doing that after a bottom or a top is in place.
Using the Signal Line
That being said, it is all about the Signal Line when trading with the RVI oscillator and, in a sense, this is the main difference between the RSI and RVI.
Of course, the RVI, like any oscillator, is highly dependent on what period is being taking into consideration as going with a large number of candles to be taken into account is going to result in a flat oscillator and therefore both the crossings above/below the main moving average as well as the spikes that may appear will not be visible anymore or just too difficult to interpret.
For more clues about how to interpret the RVI and comparison with the RSI as well make sure you check our articles in the Binary Options Academy section here as we’re cover on top of that different types of divergences as well. Also, the two video recordings for sure will make you clearly understand how to use the RVI in binary options trading.
Relative Vigor Index oscillator (RVI)
Relative Vigor Index oscillator review
Relative Vigor Index (RVI) was created by one of the leading technical analysis specialists John Ehlers, a supporter of cyclical theory of market development and the creator of many other indicators for Forex (fig. 1). RVI is used relatively recently, since 2002, and has not yet elicited its full potential.
The RVI is based on a simple rule: on an uptrend prices close above the opening price, on a downtrend they close below the opening price. The price shows the balance between buyers and sellers at a certain moment. Oscillator RVI reflects the «vigor», the strength of the current trend energy, the confidence of the closing price movement in the range of minimum and maximum prices of a certain period. Focusing on these indicators, the trader can confidently predict the continuation or end of the trend.
Relative Vigor Index values shall be calculated by formula:
RVI = (Close — Open)/(High — Low), where: Open — opening price; High — maximal price; Low — minimal price; Close — closing price.
By the way, the abbreviation RVI also denotes a completely different indicator Relative Volatility Index, the beginning traders often confuse these indicators (Forex trading training). Volatility Index does not give signals and is not included in the standard set of trading terminals, but it can be used with the same Relative Vigor Index.
In addition, novice traders can try to use the RVI as Stochastic or another similar oscillator for Forex. You can’t do this — they are really similar, but built on different principles. By the way, that’s why Stochastic and RVI when used together can give more precise signals for Forex trading.
RVI in trading terminals is placed at the bottom of the price chart, consists of two lines. As a signal line is placed moving average with a certain period depending on the strategy, usually it is a red line. The main line — the RVI line, often blue or green, actually shows the «vigor» — the energy and confidence of the market movement. The signal line is used to smooth the main line values.
Sign in by broker’s terminal, add the RVI oscillator to the chart, and see what happens
|Broker||Min 1st Deposit||Leverage||Spread||Founded||Review||Open Account|
|$10||1:1000||from 0, 007 points||2020||Review||Visit Broker Demo|
|$200||1:500||from 0 points||2020||Review||Visit Broker Demo|
|$100||1:30 EU (1: 400 other countries)||from 0.5 points||2001||Review||Visit Broker Demo|
RVI oscillator in MetaTrader 5 platform
Relative Vigor Index is one of the standard oscillators of MT4 and 5 terminals. In MT5 it is placed in the navigation panel on the left. By default, the Relative Vigor Index indicator period is 10, but it can be changed according to the Forex strategy of the trader. The higher the period, the smoother the indicators will be. If the indicator is used regularly and serves as the basis for Forex strategies, the necessary period is determined by experience.
The standard colors of the indicator in MT5 are red for the signal line, green for the RVI line. For some strategies, one of the lines can be colored, making it invisible in the trading terminal. Zero level is marked in MT5 with a dotted line. Also, if necessary, you can set an additional level of the indicator. Some traders set two additional levels from below and above zero for more accurate seeing which way the wind is blowing.
RVI oscillator signals
Typical Forex signals of the Relative Vigor Index are crossovers. If a fast (red) RVI line (fig. 2) crosses the signal slow line (green) from top to bottom, it is a signal to buy, if from bottom to top – to sell. Positions are held until the moment when the oscillator line and signal line crossover value will be back – it is a signal to open a sell deal:
Simple signals are the position of lines relative to each other. If the fast line of the indicator is placed above the slow line, (fig. 3) it shows the dominance of buyers, if the fast line is below the slow line, it is the dominance of sellers.
The Relative Vigor Index feature to take positive and negative values is used to determine the mood of the Forex market (the whole truth about Forex). If both lines of the indicator are above zero, the RVI line is placed above the signal line, the buyers prevail in the market. If both lines of the indicator are below zero, the RVI line is placed under the signal line, the sellers prevail in the market.
The divergences are considered a very strong signal of the indicator. If the price updates the maximum or minimum, and the indicators of the indicator do not confirm it, the trend is prepared for a reversal. The trader should be ready to cross the RVI lines and the signal line to open a position.
The direction of the trend can be determined by the indicators of the indicator under consideration, if it is set with a longer period, from 100 and more. In this case, if the RVI lines are above zero level (fig. 4), then only buy signals are taken into account, and if they are below zero, then only sell signals are taken into account.
Assumption is that the period of 100 and more is optimal for long-term trading, and the period of 10 and less – for short-term trading.
RVI-based trading strategies
Relative Vigor Index oscillator is not recommended without indicators. But when implementing strategies with other indicators, RVI increases their efficiency and accuracy. RVI with standard settings is used with exponential EMA with period 21 (fig. 5). In this strategy, the buy signal will be the crossing of the price of the moving average from the bottom upwards, EMA should be fixed to the price, and the RVI lines will be directed upwards. The sell signal will be a break-down of the EMA price, and the RVI lines will be directed downwards:
In order to implement the strategy with only one RVI, the levels that show overbought or oversold assets are determined at first. When the indicator line crosses the specified level, the trader opens a deal. In this case, RVI works as an oscillator and partly as a trend indicator.
The trader marks the levels at the lowest and highest points of the indicator fluctuations, if the RVI line crossed the lower limit of the range, and then returned back, it can be a signal to buy. On the contrary, if the line crossed the upper boundary of the «corridor» and came back, it can be a signal to sell. But the effective long-term application of this strategy without additional indicators is hardly possible and recommended.
The strategy is applied on the formed trend, as in the beginning of the trend creation the indicator can generate a lot of false signals. RVI can effectively complement the trade, which is based on graphical patterns on the candlestick chart. RVI in this case serves as a confirmation of the signal that generates the pattern. Another strategy involves using two EMAs with RVI indicator with the period 100 (fig. 6), one with 18 and the second one with the period 28. The strategy is implemented on a timeframe of 1 hour or more.
According to this strategy, it is necessary to wait until the green RVI line crosses the red line from bottom to top, while the price should be placed above both lines of the moving average, it will be a signal to buy. The sell signal will be the crossing of the green RVI red line, and the price will be below both moving average lines. To confirm the signals of this strategy, it is advisable to mark the direction of the trend not only with the help of the Relative Vigor Index indicator, but also on the higher timeframe. The movement of RVI lines, synchronous with the moving averages, also confirms the signal. Positions are held until the signal changes to the opposite.
One of the popular strategies with RVI is in combination with Alligator indicators and a simple moving average. The strategy is implemented on a timeframe from M5 and more. The RVI signal line does not matter in it, so it can be marked with a color that makes it invisible. RVI is set with a period of 10. Alligator is set with standard settings – periods 13, 8, 5, shift 8, 5, 3, MA method – Smoothed, apply to Median Price (HL/2). The MA moving average is set with a period of 10. When trading on short timeframes, it is additionally recommended to check signals on higher timeframes.
The Alligator indicator is used to determine the main trend on the higher timeframe. If the alligator «opens the chaps», the lines are in the order of 5 > 8 > 13, it means that the trend is upward. Positions are opened on the lower buy timeframe, if the RVI line crossed the top of the MA. Sell positions are opened if the Alligator «opens the chaps» on the upper timeframe in the order 13 > 8 > 5, the RVI line crosses the moving average from top to bottom.
In another strategy, RVI is applied only with two SMAs, on a timeframe from half an hour to an hour. One SMA is set with the period of 9, the other with the period of 100, RVI — with the period of 100.
Buy signal — RVI is higher than 0, MA with period 9 crosses MA with period 100 from bottom to top. If 9 SMA crosses 100 SMA from top to bottom and the Relative Vigor Index indicator is below zero, it is a sell signal.
Relative Vigor Index oscillator can hardly be used for trading without other tools. It is optimal to use it to confirm the signals of trend indicators. The drawbacks of RVI can be considered also false sell signals on an uptrend and the same buy signals on a downtrend. Effective trading with the help of the indicator is possible only by trend.
Many traders even believe that it is best to use the RVI on the flat, without using it on a pronounced trend. The indicator calculates the price based on the dynamics of past prices, so it can be rewritten. Besides, unlike many other oscillators, RVI does not show overbought and oversold zones.
Because of such drawbacks among traders it is possible to meet the statement about impossibility of constant use of this oscillator. But although RVI is not a very popular indicator, mainly because of the large number of false signals, it has many supporters who use it with good results. RVI, if used correctly, generates high-quality signals, thanks to smoothing it can even be used as a filter. It is believed that it is best to use the Relative Vigor Index on timeframes from M15, but not on too long ones.
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