5.9 Relative Vigor Index (RVI) trading instructions

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Relative vigor index (RVI) period setting is usually 10 but if you are using other technical indicators along its side then ensure that all your indicators have the same period setting. If you are using RVI on its own then a period setting of 10 should suffice.

Relative vigor index is made up of two lines and it is the cross-over and cross-under between those lines that we must take into consideration. In general terms, when the green line crosses under the red line; we usually have a down-trend. When the green line crosses over the red line; we usually have an up-trend. However, do not place a sell every time the green line crosses under the red line and certainly do not place a buy when the green line crosses over the red one. There is a lot more to consider.

The relative vigor index can be combined with a 100 period exponential moving average to confirm trend direction. When prices are below the 100EMA we trade down and when prices are above the 100 EMA we trade up. We also need prices to show us lower highs in a down-trend and higher lows in an up-trend. Once the relative vigor index lines cross over or under each other, we have a good signal to take a trade. Watch the full Forex training video to see how we do this.

We can also use the relative vigor index by referencing the '0' line; which is basically the half way point. All we need here is for the RVI to be on the same side of the '0' line as trend direction. So, when we are trading up, RVI needs to be above the '0' line and when we trade down, RVI lines need to be below the '0' line.