The further prices stray from a straight line during a move between two points in time, the less efficient the movement. This indicator compares two securities to show how the securities are performing relative to each other. It is calculated by dividing one security s price by a second security s price. The result is the ratio, or relationship, between the two securities. The new Relative Strength Comparative indicator lets you easily compare any security's performance - including indices.
Spreads compare two securities to show how they are performing relative to each other.
Spreads are normally calculated using futures. When plotting this indicator, simply drag and drop it from the Indicator QuickList into any chart. You ll then be prompted for the second security to use in calculating the spread. Smoothing Developed by Welles Wilder, best known for his Directional Movement system and the Relative Strength Index, this indicator was used as a smoothing component in many of his other studies. It s basically a type of moving average, similar to the exponential method in that it retains a decreasingly smaller percentage of all historical data in the series.