> *Not all volatility is created equal—upward volatility feels like profit, downward volatility feels like loss. RVI separates these psychological experiences into a quantifiable measure.*
- The Relative Volatility Index (RVI) implements Dorsey's **revised (1995)** version: computes original RVI separately on High and Low series, then averages.
- When fed single-price data (TValue), both channels receive the same value, reducing to the original (1993) formula.
The Relative Volatility Index (RVI) is a directional volatility oscillator that distinguishes between upward and downward price volatility. Originally developed by Donald Dorsey in 1993 using close prices only, RVI was **revised in 1995** to compute separate RVI values on the High and Low price series and average them. This implementation follows the revised version: when fed OHLCV bars (TBar), it runs independent RVI channels on High and Low; when fed single prices (TValue), both channels receive the same value, reducing to the original formula.
Donald Dorsey introduced the Relative Volatility Index in the June 1993 issue of *Technical Analysis of Stocks & Commodities* magazine. Dorsey designed RVI as a confirmation indicator rather than a standalone signal generator, intending it to be used alongside RSI to confirm trend strength and momentum.
The key innovation was separating volatility into directional components. Traditional volatility measures (standard deviation, ATR) treat upward and downward price movements identically. Dorsey recognized that traders experience these movements differently: upward volatility in a long position feels like opportunity, while downward volatility feels like risk.
The original 1993 formula used a 10-period standard deviation of closing prices with 14-period Wilder's smoothing (RMA). In 1995, Dorsey revised the formula to average RVI computed independently on the High and Low series, capturing volatility structure across the full price range rather than just closes.
FM Labs documents both versions: the original (close-only) and the revised (high+low average). This implementation follows the **revised** version with bias-corrected RMA for proper warmup behavior.
When fed single prices (TValue), both channels receive the same value: $\text{RVI} = \frac{\text{RVI}_p + \text{RVI}_p}{2} = \text{RVI}_p$ (original behavior).
### 2. Per-Channel: Rolling Population Standard Deviation
For each channel, compute the population standard deviation over `stdevLength` periods:
Note: Some libraries implement "RVI" as a different indicator (often RSI applied to volatility). FM Labs distinguishes between original (1993, close-only) and revised (1995, high+low average). This implementation follows the **revised** version.
1.**Confusion with other RVI indicators**: "RVI" name is used for at least three different indicators. Dorsey's original (this implementation) uses directional standard deviation. Others use RSI-like calculations on price or volume. Verify the algorithm before comparing values.
2.**Unchanged price handling**: When price doesn't change ($P_t = P_{t-1}$), the volatility is orphaned (neither up nor down). Extended flat periods push RVI toward 50 regardless of prior trend.
3.**Warmup period**: With defaults, RVI needs ~52 bars to converge. Early values may be misleading. The `IsHot` property indicates warmup completion.
4.**Not a standalone signal**: Dorsey designed RVI as a confirmation indicator. Use with RSI or trend indicators, not alone. High RVI confirms uptrend strength; low RVI confirms downtrend strength.
5.**Volatility vs direction confusion**: RVI measures which direction has MORE volatility, not which direction price is moving. A slow steady uptrend with occasional sharp drops can show low RVI despite rising prices.
7.**Zero denominator**: When both avgUpStd and avgDownStd approach zero (flat market), RVI defaults to 50. This is mathematically correct but may mask the lack of volatility.
