Relative Volatility Index (RVI)

RVI (Relative Volatility Index) — an oscillator that ranges from 0 to 100, introduced by Donald Dorsey. It looks similar to RSI, but instead of measuring price strength, it measures the balance of volatility between upward and downward movements, using standard deviation of price changes rather than the changes themselves.

• When RVI is high (dominance of “upside volatility”) — the market tends to continue rising or is overbought.
• When RVI is low (dominance of “downside volatility”) — the market tends to decline or is oversold.

How it’s calculated (intuitively)

1. For each bar, calculate the price change (Close - Close[1]).
2. Separate the bars into “up” and “down” groups.
3. Compute the moving standard deviation (StdDev) separately for “up” and “down” bars over period N (commonly 14).
4. Convert these into percentage “relative volatility strength” and normalize it into a 0–100 range, similar to RSI.

The result is an oscillator showing which side of the market currently generates greater volatility.

Note

The exact formula may vary across platforms or libraries — that’s fine. What matters for traders is consistent interpretation and signal behavior.

Interpretation and levels

Zone / Event	Meaning
RVI > 60	Dominance of “upside volatility”; bullish impulse, possible overbought
RVI < 40	Dominance of “downside volatility”; bearish impulse, possible oversold
Crossing 50 level	Shift in dominance (bulls ↔ bears)
Trend filter (ADX / MA)	Combining RVI with trend filters helps reduce false entries

Recommended thresholds

Default Dorsey levels are 60/40. For more conservative entries, use 65/35 or even 70/30.

Typical signals

Signal type	Condition	Interpretation
Breakout upward (Long bias)	RVI crosses 40 from below	Early entry on rebound
Long confirmation	RVI stays above 50	Trend continuation filter
Breakdown (Short bias)	RVI crosses 60 from above	Early sign of weakness
Short confirmation	RVI stays below 50	Trend continuation filter

Indicator “RVI Levels”

On the Veles.Finance platform, a simplified filter called “RVI Levels” is available. It automatically generates trading signals without requiring any manual level setup.

The logic is simple:

• When RVI crosses 40 from below, it triggers a Long signal.

  

• When RVI crosses 60 from above, it triggers a Short signal.

  

Thus, the “RVI Levels” filter provides precise entry signals following short-term momentum and can be used for:

• bot start conditions,
• order entry filters,
• or exit triggers (in the Profit → Signal block).

Practical use

The “RVI Levels” filter works best on 5m–15m timeframes when trading grid or multi-filter strategies.

Using RVI in Veles

The indicator is available as a filter in three sections: “Filters on Start”, “Filters on Orders”, and “Exit by Signal”.

1) Directional filter for bot start

1. Open the bot editor → Filters → Add Filter → RVI.
2. Timeframe: 15m / 1h (for conservative bots) or 5m (for aggressive ones).
3. Condition for Long: RVI > 50 (or after crossing 40 upward).
4. Condition for Short: RVI < 50 (or after crossing 60 downward).

Tip

For swing bots, use 1h + 60/40 thresholds. For intraday bots — 15m + 55/45 thresholds.

2) Filters on averaging orders

To avoid “catching a falling knife” during sharp dumps, add RVI-based restrictions for 2nd+ averaging orders:

• Order 2–3: RVI (15m) > 35 — soft protection against buying into a dump.
• Order 4+ (deep): RVI (5m) forms a bottom and starts rising, OR crosses 40 upward.

This increases the chance of averaging closer to the actual reversal rather than on the way down.

3) Exit by signal (Profit → “Signal”)

A clean way to close positions based on momentum change:

• Long position: close when RVI (5–15m) crosses below 60 or falls under 50.
• Short position: close when RVI crosses above 40 or rises above 50.

Combine with a Minimum P&L condition to avoid premature exits (e.g. ≥ 0.3–0.5%).

Combination examples

• RVI + ADX (trend strength): allow RVI entries only if ADX > 20–25 — filters out sideways noise.
• RVI + Bollinger Bands: enter when RVI confirms a move near the band edge for better timing.
• RVI + CCI/RSI Levels: RVI confirms the impulse while CCI/RSI highlight overbought/oversold zones.

Common mistakes and how to avoid them

Beware of “flipping”

RVI can oscillate rapidly around 50 on low timeframes. Use level hysteresis (60/40) or confirm signals on a higher timeframe.

Threshold ≠ signal

High or low RVI alone doesn’t make a good entry. Wait for a crossing in the desired direction or confirmation from other filters.

Adjust to volatility

For low-volatility pairs, narrow the range to 55/45. For highly volatile pairs, widen it to 65/35 or 70/30.

Conclusion

The RVI (Relative Volatility Index) is a valuable tool for analyzing volatility strength and directional momentum. Combined with RVI Levels and other filters on the Veles.Finance platform, it helps bots enter more accurately, avoid false signals, and trade in harmony with real market dynamics.