The Relative Strength Index (RSI) is a momentum oscillator, developed by J. Welles Wilder, that measures the magnitude of recent gains against recent losses on a 0–100 scale, usually over 14 periods. Readings above 70 are conventionally called overbought and below 30 oversold, marking when a move has been unusually one-sided.
RSI is used three ways: as overbought/oversold levels for mean-reversion entries, as a midline (50) trend filter, and through divergence — price making a new high while RSI makes a lower high is read as weakening momentum. The key misconception is that overbought means “sell”: in a strong trend RSI can stay above 70 for a long time, so the levels signal stretch, not a guaranteed reversal.
RSI is available as a primitive in Secuora’s AI backtester. As a standalone baseline it is unimpressive — an RSI mean-reversion rule on BTC in Secuora’s research at /strategy lost heavily over twelve months after fees, the classic trap of buying oversold readings into a downtrend.
Over 14 periods the average gain is 2 and the average loss is 1: RS = 2 ÷ 1 = 2, so RSI = 100 − (100 ÷ 3) ≈ 100 − 33.3 = 66.7.