Sunday, May 29, 2011
Overbought / oversold indicators
Unfortunately, many techniques using stochastic oscillator can produce consistent losses over time. Some analysts have recommended smoothing the data further, or looking for a confirming overbought / oversold ratio before selling or buying. Most secondary filters such as overbought / oversold indicators degrade the performance of stochastic in that one does not take advantage of major trends, getting whipsawed in and out
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