Creating an indicator that derives its values from another indicator is a common technique in advanced trading strategies. This process involves using one indicator as the input for another, thereby creating a more complex and refined analysis tool.

Step 1: Create a Base Indicator (fastSMA)

Define the Fast SMA Indicator:

• Type: Simple Moving Average (SMA)
  
  
• Properties: Set the period and any other relevant parameters for the fast SMA.
  
  
• Example Setup:

Step 2: Create a Derived Indicator (RSI)

Define the RSI Indicator Using fastSMA:

• Type: Relative Strength Index (RSI)
  
  
• Properties: Set the period and other relevant parameters for the RSI. Instead of using price data directly, use the output from fastSMA as the input for the RSI.
  
  
• Example Setup:

Step 3: Use the Derived Indicator

Incorporate the Derived Indicator into Your Strategy:

• Application: Use the RSI that is based on the fastSMA within your trading strategy to make decisions.
  
  
• Example Use Case:
  
  
  • Condition: If RSI_based_on_fastSMA crosses above a certain level (e.g., 30), it may indicate an oversold condition and trigger a buy signal.

Conclusion

By following these steps, traders can create complex indicators based on other indicators, enhancing their strategy's analytical capabilities. This approach allows for deeper market analysis and more sophisticated trading strategies within FinStudio.