This indicator is a ranking tool used to compare a group of stocks, ETFs or futures contracts to determine which specific instrument is performing best. The indicator creates a score based upon the symbols historical price movement. You can then compare this score to the other RS Rank scores of other stocks or ETFs in your basket of trading instruments. Thus, you can simply pick the instrument with the highest RS Rank score when creating a momentum based trading system.
( ( Long Term Price Change + Short Term Price Change ) / 2 ) / 10 Day ATR
The RS Rank is computed by taking the average of a long-term price change with a short term price change. This average is then divided by the 10-day Average True Range. This will produce a ranking score which can be compared to other instruments.
Here is an example. We want to use 140 days as our Long Term Price change and 20 days for our Short Term Price Change. Thus we get:
( ( Close-Close + Close-Close ) / 2 ) / 10 Day ATR