V.18:10 (58-68): Normalization by Brian R.Bell

V.18:10 (58-68): Normalization by Brian R.Bell
Item# \V18\C10\094NORM.PDF
Availability: In Stock

Product Description

Normalization by Brian R.Bell

Sometimes it can be hard to understand all those twitchy indicators on your trading screen. Here’s how most of them generate useful signals with normalization,which is the process of removing the dependency of something on something else and making it stand alone.

Purely theoretically, suppose you’re using the relative strength indicator (RSI): Sell when the RSI crosses below 75, and buy when the RSI crosses above 25. Also purely theoretically, suppose you also use signals based on a simple moving average oscillator: Sell when the oscillator crosses below a value of 50, and buy when the oscillator crosses above a value of -50.

Figure 1 shows both of these indicators applied to a daily chart of lean hog futures,the moving average oscillator in the middle graph (N1 =4 periods, N2 =8 periods) and the RSI (N =5 periods) in the lowest graph. The blue arrows on each indicator show where the buy signals occurred and the red arrows show where the sell signals occurred. The point? Both indicators give useful signals.

*Note: $2.95-$5.95 Articles are in PDF format only. No hard copy of the article(s) will be delivered. During checkout, click the "Download Now" button to immediately receive your article(s) purchase. STOCKS & COMMODITIES magazine is delivered via mail. After paying for your subscription at store.traders.com users can view the S&C Digital Edition in the subscriber's section on Traders.com.

Take Control of Your Trading.
Professional Traders' Starter Kit
All these items shown below only $299.99!
  • 5-year subscription to Technical Analysis of STOCKS & COMMODITIES, The Traders' magazine. (Shipping outside the US is extra. Washington state addresses require sales tax based on your locale.)
  • 5 year access to S&C Archive
  • 5 year access to S&C Digital Edition
  • 5-year subscription to Traders.com Advantage.
  • 5-year subscription to Working Money.
  • Free book selection.
  • Click Here to Order