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Note: This download requires NinjaTrader 8 release 8.1.3 or newer.

Overview of Rocket RSI

The Rocket RSI for NinjaTrader, which was introduced by John Ehlers, is designed to improve upon the standard RSI by addressing its inherent delay and smoothing out the noise that can lead to false signals. The traditional RSI is a momentum oscillator that measures the speed and change of price movements on a scale from 0 to 100, typically over 14 periods. It is often used to identify overbought or oversold conditions.

Ehlers’ Rocket RSI enhances the traditional RSI formula by incorporating elements that are meant to sharpen the indicator's reaction to new data, thus making it more responsive to recent price changes without increasing the noise.

How Rocket RSI Works

Rocket RSI refines the calculation process of the traditional RSI by using a smoothing technique that relies less on the lookback period and more on the immediate inputs. This is achieved through the following adjustments:

1. Smoothing Constant Adjustments: Ehlers introduces a dynamic smoothing mechanism that adjusts based on the market conditions, rather than using a fixed-period moving average like the classic 14-day RSI.
2. Faster Response to Price Movements: By modifying the input weights and the smoothing algorithm, Rocket RSI aims to react more quickly to recent price changes, which is particularly useful in volatile markets.
3. Noise Reduction: The smoothing techniques applied in Rocket RSI help to filter out random price fluctuations, thus reducing false signals and enhancing the accuracy of overbought and oversold readings.

Inputs of Rocket RSI

Rocket RSI typically involves a few key parameters that can be adjusted based on the trader's needs and the specific characteristics of the market being analyzed:

1. Length (Period): Similar to traditional RSI, the length input determines the calculation window of the RSI. However, in Rocket RSI, this may not strictly be a fixed number of bars but could be adjusted dynamically based on the formula's internal calculations.
2. Smoothing Coefficient: This parameter controls the intensity of the smoothing applied to the raw RSI values. A higher coefficient increases the smoothing effect, which might delay the signals but will reduce noise.
3. Price Source: Rocket RSI can be calculated based on different price points such as close, open, high, low, or an average of these. The choice depends on what aspect of the price action the trader wishes to focus on.

Rocket RSI Key Features

The indicator offers several customizable features:

• Custom Input: Choose from a variety of inputs (Close, Open, VWAP, etc...).
• Option to display a signal curve: There are other variations online, but this one includes both options.
• Custom Shade Color: Shade colors can be enabled or disabled on demand.

Review the screenshots and video for setup options.

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