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Chris,
This in an interesting question, which I was trying to research many
years ago. The only way you really no is if you take a look at the next
bar and the next bar and so on. So you would need a matrix that shows
you the relation between an oscillator value and the PERCENTAGE reaction
of the underlying for the next bars/days/weeks. BTW, I would not
restrict that research to only ONE market, because that could lead to
the wrong conclusion, so you should check many related markets to get a
better feeling.
BTW, exactly for this purpose we have introduced the "Evaluator" tool in
WLD3. It is a tool which is completely overseen by many but very
valuable. It also tells you the memory of the market related to an
indicator value, very interesting.
Regards,
Volker Knapp
Wealth-Lab Inc.
-----Ursprüngliche Nachricht-----
Von: Chris Evans [mailto:evanscje@xxxxxxxxxxxxx]
Gesendet: Tuesday, March 23, 2004 6:05 PM
An: Omega List
Betreff: Trading question
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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