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Dimitris,
IMHO I don't think the basic concept of stocks, markets or whatever spending
the same time at overbought and oversold levels is valid. For instruments in
a trading range this may be true, but in trending markets many TA indicators
can spend a long time at extended levels. Markets also fluctuate between
trading range, trending, and flat. I have found Dynamic Zones (self
adjusting OB/OS levels - based on std deviation or similar) can be used with
virtually any indicator to make them more adaptable to changing market
conditions.
Just my 2 cents.
Regards
John
Dynamic Zones (self a
----- Original Message -----
From: "Dimitris Tsokakis" <TSOKAKIS@xxxx>
To: <amibroker@xxxxxxxxxxxxxxx>
Sent: Monday, July 23, 2001 11:11 AM
Subject: [amibroker] Oversold and Overbought Time
Oversold and overbought levels are usually selected by experience and may
be not satisfactory for a certain Market.
We can change levels in order to give a more reliable description of the
Market.
1. When we select 30, 70 , i.e. equal distance from 0, 100, we have not any
reason
to do it. Perhaps 24, 70 for example would be more realistic.
2. I have the following idea:
I will examine the oversold time for each stock, I will take its average and
so I will
define the "mean oversold time (MOT)" for the Market.
This will be done for an oversold level which gives MOT >5% of total days,
else oversold is meaningless.
3. Then I will search for a certain overbought level which gives the same
"mean
overbought time". I consider this more fair for the Market, whereas 30, 70
or 20, 80
sounds abritary.
In other words, I ask levels which share the time equally for oversold and
overbought
phases.
Any opinion on this ?
(The thought behind the curtain is that buyers and sellers wait nearly the
same
time interval, until they change the trend.)
(formulas are almost prepared, I want to discuss the basic thought).
Best regards
Dimitris Tsokakis
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