How RSI works
The Relative Strength Index compares the size of recent gains with recent losses on a scale of 0 to 100. Readings under 30 are traditionally called oversold and over 70 overbought. In a strong trend, RSI can stay overbought (or oversold) for weeks, so many traders use it together with a trend filter.
- RSI 14 uses 14 days and Wilder’s smoothing, the same as most charting platforms.
- RSI 2 uses only 2 days. It’s very jumpy and used for short-term mean-reversion: buying sharp dips in stocks above their 200-day average (RSI 2 under 10), or selling rallies in stocks below it (RSI 2 over 90).
Frequently asked questions
Is an oversold stock a buy?
Not by itself. Stocks in a downtrend can stay oversold for a long time. Many traders only take oversold signals in stocks that are still above a long-term average such as the 200-day.
Why do I need an Alpaca key?
US stock prices are licensed data, so they can’t be handed out for free by a website. Alpaca gives anyone a free market-data key that allows 200 requests a minute and returns many stocks per request, which is enough to scan the whole list. Your key is saved only in your browser and is sent only to Alpaca. See how to get a free Alpaca key.
Which stocks does it scan?
About 600 US stocks and ETFs: roughly the S&P 500, popular growth and momentum names, and around 75 of the most traded ETFs. The largest 135 load first; the rest follow automatically a few seconds later.
Is the data real-time?
Alpaca’s free data is 15 minutes behind the market. Daily figures update through the trading day, and the latest candle is the current (unfinished) day while the market is open.