Trading Techniques   

Overbought/Oversold

Hi OneSharer, no indicator can show accurate signal.  It's you who need to "predict" the signal accurately.  

And just like what I said, I don't really use Overbought/Oversold in trading.  Considering the volume and price movement.  Overbought/Oversold can effectively be used at US Market.  Please check to prove it.

 

In rts issue, are o/s & o/b signals accurate?  

 

Hi Tigers, who does release you from the cage?

About overbought and oversold, this signal is identified base on particular time period.  I'm not actually using it, since overbought and oversold are signals that are used for only very active counter.  When the market is dormant, these signals are useless.

You can detect overbought and oversold by using RSI and William % R.  I'm not advising you to use them, but as you are asking, I'm answring ...

From William R point of view.. Oversold is detected when the signal moves below line -80% .. and Overbought when price moves above -20% line.

For RSI, Overbought when the signal is moving above 70% and bellow 30% will be oversold.

Since both signals use particular time frame, You need to be carefull to use them.  For example 14-3 RSI/William % R ... your signal will be mixed if there is consolidation period gets more than 14 days.  And you can't detect market break  using them.

 

Hi, am new here. Anyone has time to teach me how do the "Overbought" and "Oversold" counters identified? Tks.