Relative Strength

Relative strength is a method used in technical analysis to identify better-performing stocks. This method can be applied in momentum investing portfolios.

Selecting the Benchmark Index

The first step is to select a denominator or benchmark index for calculating relative strength.

Using a benchmark index is the recommended approach. For example, if your stock universe is Nifty 500, then selecting Nifty 500 as the denominator is advised.

Once you click on the Relative Strength box, a dialog box will appear, prompting you to select a relative strength condition.

Selecting a Relative Strength Condition

There are four options in the strategy selection box:

1. Pre (Predefined Strategies)
   • A set of predefined patterns that can be used as entry conditions for the portfolio.
2. My (User-Created Strategies)
   • You can create your own strategy using the System Builder in RZone.
   • Once created, your strategy will be visible under the ‘My’ tab in Momentify.
3. Public (Community Strategies)
   • Some strategies have been made public by Definedge participants.
   • You can choose from publicly available strategies in this tab.
4. Popular (Trending Strategies)
   • A collection of popular strategies built using indicators, patterns, and multiple indicators.
   • These strategies are based on investor feedback and preferences.
   • The list is regularly updated based on commonly used strategies.

Chart Type & Relative Strength Calculation

The relative strength method used depends on the selected charting method:

• OHLC Chart → Ratio Chart
• Point & Figure (P&F) Chart → P&F RS Chart
• Renko Chart → Renko RS Chart
• Other chart types follow their respective RS calculation methods.