An advanced market sentiment oscillator that combines price change, trading volume, and open interest to generate unique trading signals beyond traditional RSI analysis.
Explore complementary indicator rolesHow it works
The Herrick Payoff Index RSI calculates a unique oscillator by first generating a raw Herrick Payoff Index for each price bar, which integrates price change, trading volume, and open interest. This raw index is then transformed into a cumulative sum, creating a continuous money flow value that captures market sentiment dynamics.
The cumulative value is smoothed using a short-period exponential moving average to reduce noise, after which a standard RSI calculation is applied to this refined value. An additional configurable signal line is overlaid to help traders identify potential entry and exit points more precisely.
Why it may be useful
Traditional price-based indicators often miss critical market dynamics, but the Herrick Payoff Index RSI provides a more comprehensive view of market strength by incorporating multiple financial parameters. By blending price momentum with volume and open interest, traders gain deeper insights into potential market movements beyond surface-level price action.
This approach allows traders to understand not just where prices are moving, but why they are moving, revealing underlying market sentiment and capital flow trends. The indicator's multi-dimensional analysis helps identify potential trend reversals, confirming price movements with more robust, nuanced market intelligence.
When to explore it
The Herrick Payoff Index RSI works best in markets with significant volume and open interest data, such as futures, commodities, and actively traded stocks. It is particularly effective during trending markets where volume and momentum play crucial roles in price determination, helping traders validate potential entry and exit points.
Traders should apply this indicator most effectively when combined with other technical analysis tools, using its signals as part of a comprehensive trading strategy. It excels in identifying potential overbought or oversold conditions, signal line crossovers, and divergences that might indicate upcoming market shifts.
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What we’ve verified
Access, alerts and repainting behaviour have not been independently verified for this indicator. Check the creator’s current publication and settings.
General descriptions and classifications are recovered research. Verified details above identify the specific checks we have completed. Check the creator’s current publication for later changes.
