This video explains a strategy using the two most powerful indicators in trading – regular MACD and normalized MACD, along with RSI indicator. The video emphasizes the importance of fast and accurate signals over delay and fake signals giving examples of the same. The RSI indicator is used for confirmation of the MACD signals, and the video shows how false signals can be avoided with this combination of indicators.

trading strategy Using Normalized MACD and RSI Indicator

Introduction
Trading in the stock market is a highly profitable venture as long as you know what you are doing. To increase the chances of profitable trades, traders use technical indicators. In this article, we will discuss a great strategy using two of the most powerful indicators that traders use in the trading world.

What is MACD Indicator?
MACD (Moving Average Convergence Divergence) is a technical indicator that is used to identify potential buy or sell signals in the market. The MACD indicator consists of two lines: a fast-moving line (blue) and a slow-moving line (orange). When the blue line crosses the orange line from bottom to top, this is the buy signal. On the other hand, when the blue line crosses the orange line from top to bottom, this is the sell signal. However, the MACD indicator is not without false signals, which can lead to losses.

The Problem with Regular MACD Indicator
The regular MACD indicator has a delay in signaling, which can be a problem for traders. When traders use the MACD indicator in their strategy, it can result in missed opportunities due to a delay in the indicator signaling for a buy or sell. This delay can occur due to a variety of factors, including market volatility and other economic factors.

Introducing Normalized MACD Indicator
To overcome the limitations of the regular MACD indicator, traders can use the Normalized MACD indicator. The Normalized MACD indicator is similar to the regular MACD indicator, but it provides faster and more accurate signals. The Normalized MACD indicator can detect potential buy or sell signals earlier than the regular MACD indicator.

How Does Normalized MACD Indicator Work?
The Normalized MACD indicator works by identifying convergences between the red MACD line and the signal line. When the red MACD line starts to converge with the signal line, it indicates a potential buy or sell signal in the market. The Normalized MACD indicator provides traders with faster signals, which can be beneficial when trading in the stock market.

Eliminating False Signals
While using the Normalized MACD indicator can reduce the number of false signals, it is not enough to eliminate them entirely. Therefore, traders should use additional indicators to confirm buy or sell signals identified by the Normalized MACD indicator. One of the most powerful indicators for confirming signals is the RSI (Relative Strength Index) indicator.

What is RSI Indicator?
The RSI indicator is a technical indicator used to identify overbought or oversold conditions in the market. It measures the velocity and magnitude of price movements to determine whether an asset is overbought or oversold. The RSI indicator is represented by a line that moves between two boundaries: 0 and 100.

Intersection of RSI and Moving Average Indicator
The intersection of the RSI and Moving Average is a powerful indicator used to confirm buy or sell signals. When the RSI line crosses the moving average line from bottom to top, this is a confirmation of a buy signal. On the other hand, when the RSI line crosses the moving average line from top to bottom, this is a confirmation of a sell signal.

Choosing Inputs
When using the RSI and Moving Average Indicator, it is important to choose the right inputs. The SMA (Simple Moving Average) input should be set to 50 to provide the best results. Additionally, traders can customize the colors of the RSI and Moving Average lines to make them more visible on the chart.

Conclusion
Using technical indicators in trading is crucial to maximize profits and reduce risks. The Normalized MACD and RSI indicators are powerful tools that can be used in combination to improve traders’ profitability. However, it is essential to understand the nuances of each indicator and how they work together to identify potential buy or sell signals. Traders should also remember that no indicator is perfect and should always use their judgment when making trades.

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