True Strength Index (TSI) Explained: Unlock Its Power for Futures Trading

Introduction to True Strength Index (TSI)

The True Strength Index (TSI) helps you measure real momentum behind price changes, so you can spot strong trends early. It also shows potential reversals and overbought or oversold levels, which guide your decisions in fast-moving markets. You can use it for E-mini S&P 500 futures (ES) during busy sessions or crude oil futures (CL) when news hits.

TSI belongs to Tikitrade's Momentum category, which has tools like the RSI (Relative Strength Index) to check price speed and shifts. TSI differs because it uses double-smoothing with exponential moving averages (EMA), so it gives steadier signals than RSI in choppy times. This makes TSI better for futures, where trends can last or change fast.

TSI stands out from the MACD, which looks at average differences, because TSI normalizes momentum against absolute changes for subtler views in index futures. You might pair TSI with RSI (Relative Strength Index) for better overbought warnings or Supertrend to confirm trends in commodity futures. Ready to try this in your trades? Tikitrade's premium TSI works well on Tradovate or NinjaTrader Web.

How True Strength Index (TSI) Works

TSI moves around a zero line, which shows bullish strength above and bearish weakness below, so you see clear signals. It uses centerline crossovers for trend changes, divergences where price and TSI differ to hint at reversals, and levels like +25 for overbought or -25 for oversold. In futures, it performs best during high-volume times or rollovers, when smoothing cuts through noise for Treasury bond futures (ZN).

TSI is smoother than RSI (Relative Strength Index) because of its double EMA use, which helps in strong trends like Nasdaq 100 futures (NQ). Want to know how TSI calculates? It starts with price momentum, which is today's close minus yesterday's close. Then, it applies a longer EMA, default 25 periods, to this momentum and its absolute value. After that, it smooths again with a shorter EMA, default 13 periods. Finally, it divides the double-smoothed momentum by the double-smoothed absolute, multiplies by 100, and gets the TSI value.

This process normalizes data between -100 and +100, so you interpret it easily.

$\text{PC} = \text{Close} - \text{Close}_{t-1}$

$\text{Absolute PC} = |\text{PC}|$

$\text{Smoothed PC} = \text{EMA}_{slow}(\text{PC})$

$\text{Smoothed Absolute PC} = \text{EMA}_{slow}(\text{Absolute PC})$

$\text{Double Smoothed PC} = \text{EMA}_{fast}(\text{Smoothed PC})$

$\text{Double Smoothed Absolute PC} = \text{EMA}_{fast}(\text{Smoothed Absolute PC})$

$\text{TSI} = 100 \times \frac{\text{Double Smoothed PC}}{\text{Double Smoothed Absolute PC}}$

Chart: Example of TSI line on a 5-minute ES futures price chart, showing a divergence.

For example, in CL futures dropping on OPEC news, TSI might cross below zero early, which warns of weak momentum before price falls more. On a 5-minute ES chart in earnings season, TSI rising while price drops could signal a bullish reversal, so you look for long entries. Tikitrade lets you change averages easily, which saves time from doing it yourself. Wondering about True Strength Index (TSI) settings for futures? Defaults fit most, but adjust on NinjaTrader Web for day trades.

Trading with True Strength Index (TSI)

Risk Disclaimer: These trading setups are for educational purposes only and not investment advice. Past performance doesn't guarantee future results.

Ready to use TSI in your futures trades? Here are three strategies, each with another Tikitrade indicator for better results. Always set stop-losses and risk just 1-2% per trade, because consistency helps over time.

Strategy 1: Centerline Crossover for Trend Entries

Setup: Watch TSI on a 15-minute chart for index futures like ES, when price holds near support like a Fair Value Gap (FVG) and TSI stays close to zero.

Entry: Go long when TSI crosses above zero for upward momentum, and check if Supertrend turns bullish too.

Stop-Loss: Set it below the recent swing low or Supertrend line, about 10-15 ticks away.

Take-Profit: Aim for the next resistance or exit when TSI crosses below zero. This works well for starting trends in markets like ES after Fed news.

Diagram: Steps for centerline crossover entry with TSI and price levels.

Strategy 2: Divergence for Reversals

Setup: On hourly GC futures charts, look for price higher highs but TSI lower highs in overbought areas, which shows bearish divergence.

Entry: Short after a bearish candlestick closes, with Volume Delta confirming selling.

Stop-Loss: Place it above the recent high, based on your risk level.

Take-Profit: Target a 2:1 ratio or exit on TSI zero cross up. TSI helps spot hidden weakness in commodities, so you skip false moves.

Strategy 3: Overbought/Oversold in Range-Bound Markets

Setup: For daily ZS futures in ranges, check TSI extremes when Bollinger Bands tighten.

Entry: Buy if TSI falls below -25 and rises, with price at lower band.

Stop-Loss: Below the lower band or recent low.

Take-Profit: Sell at +25 or upper band. This uses TSI for mean-reversion in farm futures with seasons.

Chart: TSI oversold bounce on a range-bound futures chart.

TSI gives smooth signals to cut noise, so try tools like CMO (Chande Momentum Oscillator) for more options. Test on past data and manage risk to gain confidence.

Tikitrade’s True Strength Index (TSI) Indicator

Try Tikitrade's premium True Strength Index (TSI), made just for Tradovate and NinjaTrader Web. It has color clouds for fast trend spotting, signals for crossovers, and easy algorithm tweaks, unlike basic free versions. These features help you see chances quickly, like coloring bars by TSI versus zero for bias in ES sessions.

Our team adds updates from customer ideas, so TSI fits your needs better. As a futures trader, you get faster choices, which beats others.

Key settings you can change:

Fast Period (default 13) – Shorten for quick NQ trades or lengthen for swings in CL to set sensitivity.
Fast Type (default EMA) – Change to SMA for different smoothing in rough markets.
Slow Period (default 25) – Adjust base average for your time, like 25 on hourly GC.
Show Average (default true) – Adds signal line, 13-period EMA of TSI, for crossover alerts.
Paint Bars (options: value vs. prior, vs. average, vs. zero, off) – Colors candlesticks by TSI for real-time views.

Screenshot: Tikitrade’s True Strength Index (TSI) with custom cloud and signals on Tradovate for crude oil futures. Alt text: Tikitrade True Strength Index (TSI) indicator applied to crude oil futures (CL) for SEO optimization.

Check our Momentum category for matches like MACD. With True Strength Index (TSI) futures trading indicator on our platforms, you get sharp tools.

Fun Facts About True Strength Index (TSI)

William Blau created the True Strength Index in 1991 to offer a clearer momentum view beyond basic price changes. As a technical expert, Blau based it on his indicator work, which suits futures where details matter. He explained it in his book, Momentum, Direction, and Divergence, which covers how these parts build strong strategies.

Blau's ideas have helped many traders, and though he lacked a site, his work lasts in tools like ours. TSI acts like a truth finder for trends, popular in futures for finding strengths in ZB during rate changes. Ready to learn more? His book is great for momentum basics.

Conclusion

To sum up, True Strength Index (TSI) gives smooth momentum views, great for spotting trends and reversals in futures from ES to CL. Tikitrade's premium has custom visuals, signals, and support for Tradovate and NinjaTrader Web, which gives you an advantage. No matter your level, TSI helps strategies while focusing on risk.

Always talk to a financial advisor for advice on futures. Sign up for Tikitrade today and improve your futures trading with our premium True Strength Index (TSI) indicator!

Frequently Asked Questions

What is the True Strength Index (TSI) calculation?
TSI takes double exponential moving averages (EMA) on price changes and absolutes, normalized to 100. Check the formula part for steps—it smooths futures swings well.

Can True Strength Index (TSI) be used for day trading futures?
Yes, on short charts like 5-minute NQ, TSI finds crossovers and divergences. Pair it with Supertrend for checks.

How does Tikitrade's True Strength Index (TSI) differ from free versions?
Our premium has clouds, bar colors, and signals—just for Tradovate and NinjaTrader Web—plus updates from users.

What are ideal True Strength Index (TSI) settings for futures?
Defaults like 13 fast and 25 slow EMA suit most; change for your market, such as shorter for ES scalps.

Does TSI work with other indicators?
Yes, use with Volume Delta for momentum-volume info or Bollinger Bands for ranges.

Is TSI better than RSI for futures?
TSI's double smoothing cuts noise, so it fits trending futures like GC better than RSI for oscillators.

Related Indicators for Futures Trading

Boost your TSI with these Tikitrade tools for better results:

Pair True Strength Index (TSI) with RSI (Relative Strength Index) for double overbought checks in gold futures (GC).
Use with MACD to confirm divergences in crude oil futures (CL).
Combine with Supertrend for trend-following entries in E-mini S&P futures (ES).
Link to Volume Delta to check TSI signals with buy/sell pressure in soybean futures (ZS).

Embed: Tikitrade tutorial video on True Strength Index (TSI) for futures trading. Caption: Learn True Strength Index (TSI) strategies on Tradovate for optimized futures entries.