DEFINITION of 'True Strength Index - TSI'

A technical momentum indicator that helps traders determine overbought and oversold conditions of a security by incorporating the short-term purchasing momentum of the market with the lagging benefits of moving averages. Generally a 25-day exponential moving average (EMA) is applied to the difference between two share prices, and then a 13-day EMA is applied to the result, making the indicator more sensitive to prevailing market conditions. After the data is smoothed, some calculations are done to make the indicator fall in a range from +100 to -100, or from +1 to -1.

BREAKING DOWN 'True Strength Index - TSI'

A signal line (7-day EMA) is usually added - as it is to the moving average convergence divergence indicator - to help identify reversals. In addition, values of -25 and +25, like the levels of 30 and 70 used in the relative strength index, can also be used to identify levels where a security is overbought or oversold. The true strength indicator is a variation of the relative strength index.

RELATED TERMS
  1. Exponential Moving Average - EMA

    A type of moving average that is similar to a simple moving average, ...
  2. Dynamic Momentum Index

    An indicator used in technical analysis that determines overbought ...
  3. Percentage Price Oscillator - PPO

    A technical momentum indicator showing the relationship between ...
  4. Elder-Ray Index

    A technical indicator developed by Alexander Elder that measures ...
  5. Double Exponential Moving Average ...

    A technical indicator developed by Patrick Mulloy that first ...
  6. Lagging Indicator

    1. A measurable economic factor that changes after the economy ...
Related Articles
  1. Trading

    Simple Vs. Exponential Moving Averages

    These technical indicators help investors to visualize trends by smoothing out price movements.
  2. Trading

    Using The Force Index For Short- and Medium-Term Trading

    Here are the guidelines for making trading decisions using the force index in both a short and intermediate perspective.
  3. Trading

    Measuring Stock Market Sentiment With Extreme Indicators

    Pay attention to how the exhaustion principle helps technical indicators signal trend reversals when abrupt value changes coincide with high trading volume.
  4. Investing

    The Top Technical Indicators For Commodities Investing

    Traders can use "the usual suspects" (standard indicators for trend trading) when it comes to choosing indicators for investing in commodities. Here's how.
  5. Trading

    Top 7 Technical Analysis Tools

    Technical indicators determine the direction of an asset’s momentum and whether that direction will continue. Here are seven used most.
  6. Trading

    How To Best Analyze Relative Strength

    Relative strength indicators measure performance between similar instruments, uncovering opportunities that can translate into reliable profits.
  7. Trading

    The Most Important Moving Averages For Investors (AAPL, TLT)

    Investors focus on fundamental criteria to choose portfolio candidates but adding moving averages to their analysis will improve long-term performance.
  8. Investing

    Moving Average Bounce

    Find out how this simple trading strategy can be added into your trading arsenal.
  9. Trading

    Discovering The Force Index

    Learn how to measure the power of bulls behind rallies and bears behind declines.
  10. Trading

    Do Adaptive Moving Averages Lead To Better Results?

    These complex indicators can help traders interpret trend changes, but are they too good to be true?
RELATED FAQS
  1. What are the best technical indicators to complement the Exponential Moving Average ...

    Utilize additional technical indicators to complement and improve a basic trading strategy that relies on exponential moving ... Read Answer >>
  2. What are the main disadvantages of using the Exponential Moving Average (EMA)?

    Discover the primary differences between exponential and simple moving average indicators, and what disadvantages EMAs can ... Read Answer >>
  3. What are the main differences between Moving Average Convergence Divergence (MACD) ...

    Understand the exponential moving average, or EMA, and the moving average convergence divergence, or MACD, and their respective ... Read Answer >>
  4. What are the best technical indicators that complement the Relative Strength Index ...

    Learn some of the best additional technical indicators that can be used along with the relative strength index to anticipate ... Read Answer >>
  5. How do I use The Force Index for creating a forex trading strategy?

    Learn how forex traders can create a trading strategy when using the force index, a technical oscillator that shows trend ... Read Answer >>
  6. How do I use Exponential Moving Average (EMA) to create a forex trading strategy?

    Use the exponential moving average (EMA) to create a dynamic forex trading strategy. Learn how EMAs can be utilized very ... Read Answer >>
Hot Definitions
  1. Graduate Record Examination - GRE

    A standardized exam used to measure one's aptitude for abstract thinking in the areas of analytical writing, mathematics ...
  2. Graduate Management Admission Test - GMAT

    A standardized test intended to measure a test taker's aptitude in mathematics and the English language. The GMAT is most ...
  3. Magna Cum Laude

    An academic level of distinction used by educational institutions to signify an academic degree which was received "with ...
  4. Cover Letter

    A written document submitted with a job application explaining the applicant's credentials and interest in the open position. ...
  5. 403(b) Plan

    A retirement plan for certain employees of public schools, tax-exempt organizations and certain ministers. Generally, retirement ...
  6. Master Of Business Administration - MBA

    A graduate degree achieved at a university or college that provides theoretical and practical training to help graduates ...
Trading Center