What it shows: the Relative Strength Index is a momentum oscillator bounded 0–100. This rule buys when it leaves oversold and sells when it reaches overbought — a mean-reversion bet that price snaps back to the middle. Watch which market that bet survives.
The price path is simulated and calibrated to realistic statistics, with a slider for how strongly it trends. Illustrative — not a backtest of a specific market, and not investment advice.
Tune the oscillator
The rule: buy when RSI bounces up out of oversold, sell when it pushes up through overbought. Set the period, the two thresholds, and whether the market ranges or trends.
left = range-bound (oscillator heaven) · right = strong trend (overbought stays overbought)
Range-bound market — buy low, sell high works
This RSI(14) rule took 6 round-trip trades with a 67% win rate, returning +28% versus +75% buy-and-hold. When price oscillates in a range, buying the oversold dips and selling the overbought rips harvests the chop — exactly the market a moving-average crossover would whipsaw in.
How the rule did
RSI return
+28%
Buy & hold
+75%
Trades
6
Win rate
67%
Price & signals
The RSI line
Watch the purple RSI line: in a trend it hugs the top band (every “sell” is premature); in a range it swings cleanly between the bands.
Reading this
RSI and other oscillators are mean-reversion tools: they assume price snaps back to a middle. That holds in ranges and breaks in trends — the exact opposite of a moving-average crossover. Knowing which regime you are in matters more than the indicator. Full method in RSI, MACD & momentum indicators.
Frequently asked
- What does RSI measure?
- The Relative Strength Index is a momentum oscillator bounded between 0 and 100. Readings above ~70 are conventionally called "overbought" and below ~30 "oversold". It is a mean-reversion idea: the assumption that price tends to snap back toward the middle after stretching to an extreme.
- Why does RSI fail in a trend?
- In a strong uptrend RSI can sit above the overbought line for weeks while price keeps climbing — "overbought can stay overbought". A rule that sells every time RSI is overbought will keep exiting far too early and watching the trend run away. Oscillators are built for range-bound markets, not trends.
- What is the best RSI period and threshold?
- There is no universal best. Shorter periods react faster but give more false signals; the classic 14-period with 70/30 thresholds is a starting point, not a magic setting. The bigger driver of success is the market regime — range vs trend — which is exactly what the slider here lets you test.
- Is this investment advice?
- No. StockTiming is educational only. The series is simulated and illustrative, and nothing here is a recommendation to buy, sell, or hold anything.