How to Calculate the RSI Indicator using Excel – Video

Last Updated on March 10, 2021 by Mark Ursell

This article shows how to calculate the RSI indicator developed by J. Welles Wilder. It includes the Excel formulas and a video showing the steps. You can skip straight to the: RSI Calculation Video.

What Is The Relative Strength Indicator?

The RSI is a multi-purpose indicator – you can use it to avoid costly trading errors, spot hidden opportunities and find markets just before they skyrocket.

The RSI is widely used to:

Identify Reversals

How to Calculate the RSI - Reversal Example

The most popular way to use the RSI is to identify temporarily overbought and oversold levels.

Confirm The Current Trend

How to Calculate the RSI - Trend Confirmation

The RSI is also useful to identify powerful trends. It tells us the price has moved to a new trading range and gives us the opportunity to make big profits.

Identify Divergences

How to Calculate the RSI - Divergence Example

The RSI is also a good way to identify divergences; where price makes a new low and the RSI fails to make a new low.

Why Do You Need to Calculate the RSI Indicator?

If you are making trading decisions based on the RSI Indicator you should understand how it is calculated. Firstly because you are risking your own money based on a line on a chart and you should be professional in all your actions as a trader. Professionals make money, amateurs have fun and take shortcuts.

Secondly, because it will allow you to unlock the market’s secrets by analysis. You will no longer be reliant on gurus and trading tips. You can develop, test and optimize your own strategies.

Steps to Calculate the RSI

You calculate the RSI by taking the average of the most recent gains and dividing it by the average of the most recent losses.

Create Two Columns To

Total Time: 5 minutes

Create Two Columns To Show the Gains and Losses

Create a column to record to gains (close price greater than the previous close) and another column to record losses (close price lower than the previous close).

Create Two Columns To Calculate the Average Gains and Losses

The next two columns calculate the gains and losses. In the top cell use the AVERAGE formula. In the next cell use the formula:

(Current Value + (Previous Average * (Number of Periods – 1)) / Number of Periods

Calculate the Relative Strength

Divide the average gains by the average losses to get the relative strength.

Calculate the RSI

Take the Relative Strength and convert it into the RSI by using the following formula:
100 – (100/(1 + Relative Strength))

Date Close Gains Losses Gains Ave Losses Ave Relative Strength RSI
14 14
17/12/2010 1243.91
20/12/2010 1247.08 3.17 0
21/12/2010 1254.6 7.52 0
22/12/2010 1258.84 4.24 0
23/12/2010 1256.77 0 2.07
27/12/2010 1257.54 0.77 0
28/12/2010 1258.51 0.97 0
29/12/2010 1259.78 1.27 0
30/12/2010 1257.88 0 1.9
31/12/2010 1257.64 0 0.24
03/01/2011 1271.87 14.23 0
04/01/2011 1270.2 0 1.67
05/01/2011 1276.56 6.36 0
06/01/2011 1273.85 0 2.71
07/01/2011 1271.5 0 2.35 2.75 0.78 3.52 77.89
10/01/2011 1269.75 0 1.75 2.56 0.85 3.00 75.03
11/01/2011 1274.48 4.73 0 2.71 0.79 3.43 77.44
12/01/2011 1285.96 11.48 0 3.34 0.73 4.55 81.98
13/01/2011 1283.76 0 2.2 3.10 0.84 3.70 78.71

YouTube RSI Calculation Video

Formulas Used

Upward Movement O5 =IF(F5>F4,F5-F4,)
Downward Movement P5 =IF(F5<F4,F4-F5,)
Average Upward Movement Q18 =AVERAGE(O5:O18)
Average Downward Movement R18 =AVERAGE(P5:P18)
Relative Strength S18 =Q18/R18
RSI T18 =100-(100/(S18+1))

Next Step – Boost Your Winning Trades

Tradinformed Backtest Models give you control back over your trading. The models are built in Excel and give you the security to develop new strategies and optimize your existing ones.