Over the past few weeks I’ve written more and more about technical analysis methods here in Small Cap Investor Daily. I feel it’s incredibly important for independent investors to have a solid set of tools to help evaluate potential investments. Otherwise we’re just following what other people are saying without using our own brains, a sure-fire way to lose money. Independent investors need to think for themselves, and act according to their own research. 

So today I want to talk about another technical indicator – The Relative Strength Indicator (RSI). This is a very easy indicator to turn on when using most finance charting websites such as Yahoo! Finance or StockCharts.com. On Yahoo! Finance, use the Interactive Chart feature and look in the drop-down tab for Technical Indicators. You can set the RSI to the period of your choice. Note that it will be in the same period as the one you select for your chart, days for a daily chart, weeks for a weekly chart, or minutes for a minute chart. I suggest sticking with 14 days and 3-month, 6-month, and one year charts until you become accustomed to using the index. 

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