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Dear John,
Thank you for your reply.
"many TA indicators can spend a long time at extended levels"
this is exactly what I am wondering. We, people, observe long
oversold or overbought periods. Strong buyers or sellers do not.
They act quickly, when their o/s or o/b criterion is OK.
If we take a lower o/s level, the o/s time will not be too long.
I will revert with details on the subject.
Dimitris Tsokakis
--- In amibroker@xxxx, "John R" <jrdrp@xxxx> wrote:
> 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@xxxx>
> 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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