Overbought/oversold
- Thread starter KGTrader4
- Start date
Robert Morse
Sponsor
When I take a loss, oversold.
That's a tough one. It's not necessarily black or white, but gray. A lot of trading can depend on a personal judgement call. No one or nothing will ever completely nail a call on the dot.
But you don't need to be laser precise in the market to get rich, just being semi-precise within a close range will get you there.
Overbought or oversold....that's similar to asking how high or high low will something go? No one or nothing absolutely knows.
There's a lot of art, and science, moving the market every day at any given moment in time. Trading is not a square, linear, logical, left brained activity.
But to kind of answer your question you have to establish a reasonable market framework hypothesis, and if the current price is near there....more or less....that's the top'ish or bottom'ish, of course irrational deviations happens all the time too,
All OB OS indicators are lousy.
The price can become
even-much-more-over-bought or
even-much-more-over-sold
even when RSI has shown it is already OB or OS.
Perhaps wait for someone to invent the
magical OB OS indicator.
Better still, delete all indicators.
Then you eliminate the OB OS problem right away.
And you just focus on how to adjust the Target Profit.
The price can become
even-much-more-over-bought or
even-much-more-over-sold
even when RSI has shown it is already OB or OS.
Perhaps wait for someone to invent the
magical OB OS indicator.
Better still, delete all indicators.
Then you eliminate the OB OS problem right away.
And you just focus on how to adjust the Target Profit.
RSI(14)
Easy answer. Nobody at ET likes it. Nobody. Most hate it. That's why it works, always has always will.
Besides me who has used the RSI indicator beautifully in the fight of the century? Foreman was climbing in an upwave rally but then in the 8th round Ali noticed the divergence at 70 compared to Price (Foreman).
He placed his short!
Boom! Adios amigo!
How RSI(14) enabled me to nail the corona virus top and skedaddle with profits intact whilst every mothers' son perished. Not only was it about profits but had I been cott in the downdraft it would have been thoroughly demoralizing. It would damage my confidence because I was soooooo new to the game.
Instead, as I gazed in awe as the Dow Jones collapsed the power in the chest grew exponentially. I was on a High for weeks thereafter.
Take with a grain of salt, I was not at ET at that time so like everyone at ET this could be pure hindsight buuuuuuuuuulllllllsh*t
RSI divergence 72 vs 62 plus slightly to the left notice the RSI lower low wave violation. Double confirmation whammy. This was it. I was outta there. Boom.
Mudddderf%$%%$#er was I proud of myself.
The simplest tools that have stood the test of time are the best. I personally have made RSI my own by nuancing it - not to be found in any books. Get to know your tools well, know them inside out, you need no more than 2 at the very most, 1 is best.
The more indicators they sell you the more f**k*d you will be. Travel light.
Watch current prices in Dow Jones daily for how RSI flogs Price trendline. I can promise you there might be 50 ways to leave your lover but when that RSI trendline goes bust, its all over for Dow Egbert
Just another instance of the coterminous-with-Heaven-mighty-RSI
Now you could plug in a steep trendline on to Price as shown. RSI flogs it by one bar. Imagine the savings.
Somewhere out there in the wilderness is the soul of RSI singing his song of distress that so few love him. Were it not for yours truly, RSI would have committed suicide long time ago.
Tis then is RSI's song to traders about the way they treated him was so wrong ..........