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Does anyone have an idea they would share or one they have read that tries to solve the following problem:
If you are trying to build a system where a reversal approach seems to work better than a breakout system and you have found an oscillator that gives you decent oversold signals. What is a way (the best way) to tell when the signal is too early or the market is going to continue to break down (if a buy has been signaled).
I have tried things like looking for the open to be> the close or a moving avg of opens to flip above an average of closes (fails) .. I have tried to look and see if the Osc. is oversold for N consec days then get out. I have tried waiting for the osc. to cross above an oversold level but this can happen so late that the entry level is much worse. If you wait for a cross above a level like say 10 (scale = 0-100) then you have a problem picking that number since if you pick a very low level then you'll miss many trades and if you pick a higher level that is too high then the osc. may have to rally too far for a good signal to be given.
Any thoughts?
CJE
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