Relative Volatility Index

The Relative Volatility Index applies RSI-style smoothing to standard deviation instead of price change, splitting volatility into up-day and down-day components so traders can see which direction volatility is leaning on a 0 to 100 scale. Bar by bar, a rolling standard deviation of closing prices is credited to an up stream when the close rises or a down stream when it falls; both streams are smoothed, and the RVI is the up stream's share of the total, times 100. Defaults are a 10-period standard deviation with 14-period smoothing — a straight implementation of Donald Dorsey's standard formula.

How to Trade the Relative Volatility Index?

• RVI above 50: the volatility is coming from up-closes — movement favors buyers.
• RVI below 50: down-closes are producing the volatility, the bearish condition.
• RVI above the Overbought Level (80): upside volatility has become one-sided and stretched.
• RVI below the Oversold Level (20): the equivalent downside extreme.

Both levels are drawn as dashed lines, and alerts cover all four boundary events — entering and leaving overbought, entering and leaving oversold.

Relative Volatility Index Settings

• Stdev Length (default 10): the number of bars in the rolling standard deviation of closes used as each bar's volatility reading.
• Smoothing Length (default 14): the number of bars used to smooth the up and down volatility streams.
• Smoothing Type (default EMA): EMA is Dorsey's classic calculation; Wilder (RMA) reproduces implementations built on Wilder smoothing.
• Overbought Level (default 80): the boundary above which volatility is considered concentrated on up moves.
• Oversold Level (default 20): the boundary below which volatility is considered concentrated on down moves.

Frequently Asked Questions

How is the Relative Volatility Index different from RSI?

RSI feeds the shared smoothing machinery the size of price changes; the RVI feeds it a dispersion reading sorted by the close's direction. The two can disagree — price drifting up on fading energy keeps RSI firm while the RVI sags — and that disagreement is the information the pairing offers.

Is this the same as the Relative Vigor Index?

No — the abbreviation is the only overlap. The Relative Vigor Index measures bar conviction from close-versus-open; the Relative Volatility Index sorts standard deviation into directional buckets, so check which of the two a strategy note means by "RVI."

How should the RVI be combined with other indicators?

Use it as a directional gate: allow longs from other systems only with the RVI above 50, shorts only below. It also pairs well with unsigned size measures such as ATR, adding the directional lean they ignore.