JayneshKasliwal

JayneshKasliwal

10-01-2022

07:58

A Mega Thread on RELATIVE STRENGTH A method to improve Stock Selection and Conviction in trades Retweet 🔄And Follow @JayneshKasliwal

What is RELATIVE STRENGTH? Relative strength is a strategy used in momentum investing and in identifying value stocks. It focuses on investing in stocks or other investments that have performed well relative to the market as a whole or to a relevant benchmark. 1/n

For example, a relative strength investor might select technology companies that have outperformed the Nifty50, or the Nifty 500. This is basically used for Identifying the strongest sector , stocks , asset class by comparing the relative performance 2/n

How to apply it in tradingview? Type “Relative Strength” Choose any By bharattrader By traderlion By Modhelius I use by bharattrader In setting use 65 period 3/n

Formula for Rs Using 65 as period and base as NiftyOne can use 123 or 250 as period depending upon your time frame of holding If your view is short term then 65 works great and mid to long term can use 123 and 250 . @kuttrapali26 4/n

Why to Use RS ? Helps to filter out stocks in good momentum and that are giving better returns than nifty These stocks tend to outperform the market. These are potentially superstocks 65 period signifies 3 months of trading In 3 months we have around 65 trading days 5/n

How does RELATIVE STRENGTH look ? 0 line that helps to differentiate between underperformer and outperformer >1 Outperforming the markets <0 Underperforming the markets When 65 RS Goes above 2 its too much heated and generally goes into consolidation or pullback @vivbajaj 6/n

Simple Example of Relative Strength Nifty Falling 10% but your Stock is not falling and staying sideways Means it has Strength to fight against the falling market. When Market Recovers it already had strenght and hence it will moe more faster 7/n

Ways To Use RS Most Popular - Stock vs Index (Example – Reliance Vs Nifty 50) Stock Vs Stock in same sector (Example –LTI Vs Infy) Stock Vs Stock across sectors (Example –Reliance Vs TataMotors) LTI Comparing IT stock vs NIFTY vs IT index 8/n

Local Index Vs Global Index (Example – NIFTY50 vs S&P 500) Relationship across sectors (Banking vs Telecom) Relationship across asset classes (Gold Vs Dow) Relationship across segments of the market (Mid-cap index vs Small cap index) 9/n S&P500 Vs Nifty

NIFTY INFRA vs NIFTY 50 VS NIFTY psu The Highlighted part means that Nifty Infra is outperforming the nifty 50 index in that period but underperforming the Psu bank index That indirectly means that psubanks have outperformed both nifty and nifty infra and hence is the strongest

You can Compare any Asset with any other asset by changing the comparative symbol You can use CNX IT , PHARMA , INFRA to compare your stocks to specific Sector 11/n

Outperformance Vs Underperformance JSLHISAR vs AMARRAJA BATTERY 12/n

Extended >2: Stock Correct Extended >2 Stock turns Sideways Globus Spirits Vs Goodluck 13/n

Points to remember : Key point: Relative Strength tends to select high beta or low beta stocks, depending on the market trend. When that trend undergoes a major reversal, Relative Strength will see its peak underperformance. Because tops and bottoms are sharp and quick. 14/n

Different Type of Relative strength COMPARATIVE RELATIVE STRENGTH One can Simply divide Stock Price by Index Price This is known as ratio chart 15/n

In tradingView use "/" Symbol to plot the ratio chart in symbol search Reliance vs BalajiAmines 16/n

Understanding the trend 17/n

Difference between RS vs CRS The RS calculates the relationship between price of the past “N” period in our case 65 The CRS calculates the relation on daily basis price change and plots CRS will show you the trend of the particular day while RS shows you trend of past 65 days 18

Simpler Explanation Example 1 Nifty Falls 10 % over a period but a stock a stock gains 10% . What does that mean ? Nifty Stays Flat over a period but a stock gains 10% . What does that mean ? Nifty Rises 10% over a period but your stock Rises 50% . What does that mean ? 19/n

ANS : Buyers are still interested in the stock/ Sellers are weak and when market recovers these are the stocks which move Ahead much faster as they already have strength . Stocks that are showing strength in weak market will outperform in strong market 20/n

CASE STUDYS NIFTY Fallen 11% from highs CHAMBALFERT : Stays Flat MANINFRA : Up 22% in weak market PVR : Falls More than 25% 21/n

CASE STUDY LIVE Screenshot From Telegram channel Technical Test given to followers to select the best stock A) outperformer as + RS B) and C) At support and hence most chose that as an answer as swing trading bet Over the next 10 days A) JSL HISAR gave a + Return of 18% 22/n

Immediately the stock A) gave 6%+ Returns while other stocks closed in red Even though a stock is trading at support doesn’t means its bound to rise A stock with Positive RS will move faster than a stock with –Ve RS That is OUTPERFORMANCE we are talking about 23/n



Follow us on Twitter

to be informed of the latest developments and updates!


You can easily use to @tivitikothread bot for create more readable thread!
Donate 💲

You can keep this app free of charge by supporting 😊

for server charges...