A Bloomberg study discovered MACD is the second most popular indicator after the RSI.
But the MACD has BIG problems.
And Alex Spiroglou has the solution.
Here’s 8 reasons traders should consider updating to a new MACD indicator, from my podcast discussion with Alex:
MACD Challenges
MACD has serious limitations.
It can’t be compared across different timeframes or markets. It doesn’t adapt well to extreme readings, gives misleading divergence, and isn’t a true gauge of market strength.
This results in poor quality insights. So, what’s the solution?
![](https://bettersystemtrader.com/wp-content/uploads/2024/06/Slide3-1024x576.jpg)
Normalizing Indicators
Normalizing indicators can improve their effectiveness and make them comparable across different timeframes and markets.
Normalizing the MACD by volatility (MACD-v) can overcome limitations and provide better market insights.
![](https://bettersystemtrader.com/wp-content/uploads/2024/06/Slide4-1024x576.jpg)
The benefits include:
Benefit #1: Normalized Scaling
MACD-v indicator values can be compared across different timeframes and securities.
This allows traders to accurately compare momentum levels across various markets and timeframes.
Benefit #2: Adapts to Trends
The MACD-v can effectively adapt to trends as it is not limited by a fixed range of values.
It expands as the market trend strengthens, providing a clearer indication of momentum.
Benefit #3: Regime Filtering
The MACD-v can be used as a regime filter.
Traders can identify different market conditions by defining overbought and oversold levels based on MACD-v ranges.
This allows more precise entry and exit points.
Benefit #4: Better Divergence Signals
The MACD-v improves the quality of divergence signals compared to the traditional MACD.
It also avoids false divergence signals that can occur when the indicator gets pegged at extreme levels.
Benefit #5: Momentum Lifecycle
The MACD-v indicator can be integrated with the Momentum Lifecycle Roadmap.
This provides traders with a comprehensive view of market conditions and potential trading opportunities.
![](https://bettersystemtrader.com/wp-content/uploads/2024/06/Slide5-1024x576.jpg)
Benefit #6: Multi-Timeframe, Multi-Factor Approach
MACD-v fits into a comprehensive trading process using a combination of macro factors, technical indicators, and setups can provide a comprehensive trading strategy.
![](https://bettersystemtrader.com/wp-content/uploads/2024/06/Slide2-1024x576.jpg)
Full Interview
Watch my full discussion with Alex:
Click here to check out the BST YouTube channel for more great trading content.