Info!! Best Practices Inwards Trading: Quest Novel Questions

I induce got consistently flora that success comes from hollo for ameliorate in addition to deeper questions.  It's the out of the box questions that tin Pb to fresh insights in addition to answers.  I of late came across a 2014 review of functioning from a trader that outlined all the mistakes he had made during the twelvemonth in addition to the things he wanted to improve.  I asked a inquiry he did non anticipate:  "What did you lot create good inward 2014 in addition to what if you lot *only* did those things inward the novel year?"  Asking a fresh inquiry volition non e'er generate novel in addition to ameliorate answers, but hollo for the same, stale questions most sure as shooting volition non yield creative insights.

In my electrical flow research, I'm looking at overbought in addition to oversold indicators.  How much of an border create they truly provide?  Do roughly measures offering significantly greater edges than others?  Over what fourth dimension frames?  Do overbought in addition to oversold measures offering unlike levels of border inward unlike types of markets?  Are at that spot times to utilise these indicators in addition to times nosotros should non endure giving them weight?

Notice that such an approach is really unlike than merely looking at a criterion mensurate such every bit RSI or Stochastics in addition to pronouncing a given grade every bit overbought or oversold.  It's the tougher, to a greater extent than detailed questions that tin yield nuggets of insight.

For example, suppose nosotros rails the set out of stocks inward the SPX index that are making fresh five-day highs vs. five-day lows.  If nosotros teach dorsum to 2006 in addition to separate the marketplace position into quartiles based upon volatility (VIX), nosotros detect that an oversold grade inward the lowest VIX quartile (1 SD below average) is -62.  An oversold grade inward the side yesteryear side VIX quartile is -138.  In the 3rd VIX quartile, the same oversold grade is -199.  And at the highest VIX quartile, the oversold grade is -265.  In other words, what constitutes overbought in addition to oversold is relative to the volatility government of the market.  Looking at static levels of overbought in addition to oversold across all markets gives us really distorted results.

Does a regime-specific mensurate of overbought vs oversold breadth offering a greater trading border than an absolute level?  It's all really testable, but solely if nosotros get together the information in addition to enquire the question.

Further Reading:  Institutional Participation in addition to Momentum
.