Define: Relative Volatility Index

UK Accounting Glossary

Definition: Relative Volatility Index



Advertisement



Full Definition of Relative Volatility Index


The Relative Volatility Index is similar to the Relative Strength Index except that RVI is based on the standard deviation of high and low as opposed to the RSI which is based on the current and previous day’s closing prices.

The Relative Volatility Index was introduced in the June 93 edition of Technical Analysis of Stocks & Commodities:  “The Relative Volatility Index” by Donald Dorsey.

Relative Volatility Index Formula

The Relative Volatility Index is calculated by first computing rolling standard deviations for the daily highs and then calculating rolling standard deviations for the daily lows. Then each of these lines is smoothed by an Exponential Moving Average. The indicator is then calculated as the smoothed standard deviation of high values divided by the sum of the smoothed standard deviations of high and low values.

The Relative Volatility Index takes two parameters. The first parameter is the period used to calculate the standard deviations. The second parameter is the period used for the smoothing Exponential Moving Averages.

Interpretation

The Relative Volatility Index is usually combined with MACD to produce entry and exit signals. An entry (or buy) signal is indicated when the MACD rises above its signal line and the RVI is greater than 50%.  An exit (or sell) signal is indicated when the MACD falls below its signal line and the RVI is less than 50%.

The Relative Volatility Index is usually combined with MACD to yield buy and sell signals.


Advertisement



Synonyms For Relative Volatility Index


RVI


Cite Term


To help you cite our definitions in your bibliography, here is the proper citation layout for the three major formatting styles, with all of the relevant information filled in.

Page URL
https://payrollheaven.com/define/relative-volatility-index/
Modern Language Association (MLA):
Relative Volatility Index. PayrollHeaven.com. Payroll & Accounting Heaven Ltd. March 31, 2020 https://payrollheaven.com/define/relative-volatility-index/.
Chicago Manual of Style (CMS):
Relative Volatility Index. PayrollHeaven.com. Payroll & Accounting Heaven Ltd. https://payrollheaven.com/define/relative-volatility-index/ (accessed: March 31, 2020).
American Psychological Association (APA):
Relative Volatility Index. PayrollHeaven.com. Retrieved March 31, 2020, from PayrollHeaven.com website: https://payrollheaven.com/define/relative-volatility-index/

Definition Sources


Definitions for Relative Volatility Index are sourced/syndicated and enhanced from:

  • A Dictionary of Economics (Oxford Quick Reference)
  • Oxford Dictionary Of Accounting
  • Oxford Dictionary Of Business & Management

This glossary post was last updated: 22nd March 2020.