TL;DR. An RSI smoothed by an EMA, with a trailing line that follows it at a distance set by how much the smoothed RSI usually moves. The trailing line flips sides with the trend, like a Supertrend drawn on the RSI.
What it measures
- Momentum, smoothed. The smoothed RSI is a calmer RSI on its usual 0 to 100 scale.
- The RSI's own volatility. The trailing line keeps a distance of
factortimes the smoothed RSI's average bar-to-bar move, so it hugs a quiet RSI and gives a jumpy one room. - Trend state. The line sits below the RSI in an uptrend and above it in a downtrend; the side it is on is the trend.
Formula
Inputs in AlgoLift
| Setting | Default | Range | Notes |
|---|---|---|---|
| RSI period | 14 | 1 to 500 | Bars in the RSI. The volatility averages use 2n - 1. |
| Smoothing | 5 | 1 to 500 | Bars in the EMA that smooths the RSI. |
| Factor | 4.236 | 0.1 to 20 | How many average moves the trailing line keeps away. Larger means fewer flips. |
| Source | Close | Close, Open, High, Low, HL2, HLC3, OHLC4 | Which value of each bar the RSI reads. |
Outputs in AlgoLift
| Handle | Type | Plotted | Notes |
|---|---|---|---|
| QQE | Numeric | Always | The trailing line: the lower band in an uptrend, the upper band in a downtrend. |
| Smoothed RSI | Numeric | Always | The RSI smoothed with an EMA, 0 to 100. Dashed guide at 50. |
| QQE long | Numeric | On select | The trailing line while the trend is up; no value while it is down. |
| QQE short | Numeric | On select | The trailing line while the trend is down; no value while it is up. |
A rule reading QQE long or QQE short is false on the bars where it has no value, so either one doubles as a trend-state test.
How to read it
- Smoothed RSI crossing above QQE: momentum has turned up through its trailing line. A long signal.
- Smoothed RSI crossing below QQE: the mirror.
- Smoothed RSI above 50 with the line below it: an established uptrend in momentum.
- Frequent crosses: the RSI is choppy for this factor. A larger factor trails further and flips less.
Best in, worst in
Best in trending markets with pullbacks, where the trailing line keeps you in through small RSI dips.
Worst in a flat RSI around 50, where the line and the RSI cross repeatedly.
Three setups
1. Trailing-line cross
A Crossover of Smoothed RSI above QQE enters long, below enters short. Exit on the opposite cross.
2. Trend filter with the 50 line
Take the long crosses only while Smoothed RSI is above 50, and the short crosses only below it (a Comparison ANDed in).
3. QQE as a trend gate
Use a Comparison that QQE long is above 0 to allow longs from another trigger: it has a value only while the QQE trend is up.
Common mistakes
- Reading the trailing line as a price level. QQE lives on the RSI's scale, not price. Compare it with the smoothed RSI, never with a close.
- Shrinking the factor to get more signals. A small factor flips on noise. Change it in steps and watch the trade count (overfitting in trading).
- Forgetting the warmup. The trailing line needs about five RSI periods of history; the engine loads it, but a short chart will show it starting late.
QQE trails a smoothed RSI with a volatility-sized line that flips with the trend: trade the crosses, and use the side of the line as the trend.