# Relative Rotation Graphs A Breadth, Sentiment & External Data concept (Relative strength & rotation) in the LuxAlgo Library, with 1 indicator implementation. ## What are Relative Rotation Graphs? A Relative Rotation Graph (RRG) is a two-axis scatter view of relative strength, created by Julius de Kempenaer. Each symbol in a watchlist is plotted against one benchmark: the horizontal axis is the JdK RS-Ratio, a normalized measure of the symbol's [relative strength](https://www.luxalgo.com/library/concept/relative-strength-comparative/) trend versus the benchmark, and the vertical axis is the JdK RS-Momentum, the rate of change of that ratio. Both are scaled around 100, so every symbol lands in one of four quadrants: leading (strong and strengthening), weakening, lagging, and improving. De Kempenaer, a Dutch sell-side analyst, developed the display in the 2000s out of a practical frustration: institutional clients wanted one picture of many relative trends at once, not a stack of ratio charts. The design reached wide audiences when major platforms adopted it in the 2010s, and the JdK axis names preserve its authorship. The normalization is the design's core trick, since scaling every ratio's trend and momentum around 100 makes utilities and semiconductors legible on the same picture. Because [relative-strength ratios](https://www.luxalgo.com/library/concept/ratio-charts/) tend to oscillate around their own trend, symbols often travel clockwise through the quadrants over time, from improving into leading, then weakening, then lagging. Trails behind each point show the recent path. The rotation is a tendency, not a rule: names can stall, reverse, or cut straight across the chart. And the whole display is relative, so a symbol in the leading quadrant of a falling market is only falling less than the benchmark. Two configuration choices quietly control everything shown. The benchmark defines the question (sectors against the index, countries against a world index, coins against bitcoin), and a symbol's quadrant can change entirely when the yardstick changes. The timeframe sets the rotation's clock, with weekly RRGs turning over weeks-to-months for position work and daily RRGs spinning faster for tactical rotation, so quoting a quadrant without its benchmark and timeframe says almost nothing. ## How to read a Relative Rotation Graph An RRG compresses a whole watchlist's performance against one benchmark into a single rotating picture. Reading it comes down to position, heading, and speed. 1. Locate each symbol's quadrant. Right of 100 means its relative-strength trend is up (leading or weakening); left means it is down (lagging or improving). Above 100 means that trend is currently gaining momentum; below means it is losing momentum. 2. Read the trail. The tail shows where the symbol came from and how fast it is moving: long, straight tails indicate a persistent relative move, while short or curling tails indicate hesitation or a turn in progress. 3. Weight heading over location. A name in the lagging quadrant heading northeast is improving in practice, while a leading name hooking downward may be rolling over. Direction of travel usually says more than the box the dot sits in. 4. Check the benchmark and timeframe. Rotations on weekly data unfold over months and on daily data over weeks, and the same symbol can occupy different quadrants on each. Everything shown is relative to the chosen benchmark, not absolute performance. 5. Read the whole cloud as breadth: a universe fanned wide across quadrants marks a rotational, stock-picker's tape, while a tight ball around the benchmark marks low dispersion where selection matters less. ## How traders use it - For rotation scans: relative-strength followers concentrate longs in symbols moving through improving into leading against the benchmark and reduce or avoid names sinking through weakening into lagging, an approach shared with [sector rotation models](https://www.luxalgo.com/library/concept/sector-rotation-model/). - As a portfolio lens: plotting current holdings shows at a glance which positions still earn their place on relative strength and which are quietly decaying, sometimes before absolute price damage appears. - Paired with absolute price work: because RRG position says nothing about the direction of price itself, entries and exits are usually taken from standard chart analysis, with the RRG acting as the selection filter. - Across asset classes: plotting bonds, commodities, currencies, and equities against one neutral benchmark turns the RRG into an [intermarket](https://www.luxalgo.com/library/concept/intermarket-analysis/) dashboard, the rotation view of money moving between classes. - In FX and crypto: currency pairs against a strength benchmark serve as a rotation-style [currency strength](https://www.luxalgo.com/library/concept/currency-strength-meter/) read, and altcoins plotted against bitcoin show which names lead or lag the market's own base asset. ## RRG vs other relative-strength views - **Relative Strength Comparative** (https://www.luxalgo.com/library/concept/relative-strength-comparative/): The comparative RS line is one symbol against one benchmark over time, rich in detail and limited to one story per pane. The RRG normalizes and overlays a whole universe of such lines, trading each story's depth for the crowd's geometry. - **Ratio Charts** (https://www.luxalgo.com/library/concept/ratio-charts/): A ratio chart is the raw material: one dividend series, readable with ordinary chart tools. The RRG derives trend and momentum from many ratios and standardizes both, which adds comparability and hides the levels and structure a ratio chart preserves. - **% Stocks Above 20/50/200-day MA** (https://www.luxalgo.com/library/concept/percent-stocks-above-20-50-200-day-ma/): Diffusion gauges compress a universe into one participation number against each member's own history. The RRG keeps every member visible and measures them against a common benchmark instead, breadth as a picture rather than a percentage. ## FAQ ### Do symbols always rotate clockwise on an RRG? No. Clockwise rotation is the average behavior, because relative momentum tends to turn before the relative-strength trend does, but individual symbols routinely stall, reverse, or cross directly between quadrants. Treat the quadrant sequence as a map of typical behavior, and give the actual heading and speed of each tail more weight than the expected path. ### Does the leading quadrant mean a stock is going up? Not necessarily. Everything on an RRG is measured against the benchmark, so leading means outperforming it. In a falling market, a leading symbol may simply be declining less than the index. For long entries, most users combine RRG position with absolute price analysis, so they are buying actual uptrends rather than mere relative resilience. ### What do the JdK RS-Ratio and RS-Momentum actually measure? RS-Ratio is a normalized reading of the trend in the symbol-to-benchmark ratio: above 100 the relative trend is up, below 100 down. RS-Momentum applies the same treatment to the RS-Ratio's own rate of change, so it turns before the ratio does. The exact smoothing is proprietary to the design, but the two axes are conceptually a trend measure and its derivative. ### Should RRGs be read on daily or weekly data? Both, for different jobs. Weekly RRGs turn slowly and suit position-level rotation, where a quadrant journey plays out over months; daily RRGs spin fast enough for tactical adjustments and swing-length reads. The classic workflow reads weekly for the campaign and daily for the timing, and treats disagreement between them as a reason for patience rather than a contradiction. ### Can RRGs be used for crypto or forex? Anywhere ratios exist. Altcoins are commonly plotted against bitcoin, which reframes every question as 'is this coin beating the base asset', and currency work plots pairs or synthetic baskets against a neutral benchmark for a rotation-style strength read. The usual caveats scale in: benchmark choice dominates the picture, and thin universes make the cloud geometry less meaningful. ### Why do the trails matter so much? Because the dot is a position and the trail is a trajectory. Two symbols in the same quadrant with opposite headings are opposite stories: one arriving, one leaving. Long straight tails mark persistent relative moves worth riding; short curling tails mark indecision; a hook forming in the leading quadrant is the classic early exit read. Most experienced RRG users read tails first and quadrants second. ## Implementations in the Library - Relative Strength Scatter Plot (LuxAlgo): https://www.luxalgo.com/library/indicator/relative-strength-scatter-plot/ ## Related concepts - Relative Strength Comparative: https://www.luxalgo.com/library/concept/relative-strength-comparative/ - Ratio Charts: https://www.luxalgo.com/library/concept/ratio-charts/ - Currency Strength Meter: https://www.luxalgo.com/library/concept/currency-strength-meter/ - Sector Rotation Model: https://www.luxalgo.com/library/concept/sector-rotation-model/ --- Source: https://www.luxalgo.com/library/concept/relative-rotation-graphs/ (LuxAlgo Library, the encyclopedia of trading & technical analysis). Free to use with attribution: https://www.luxalgo.com/library/license/