The KD indicator and BIAS indicator are the golden combination indicators for grabbing rebounds. The function of the BIAS indicator is to confirm whether the stock price has oversold, while the role of the KD indicator is to display whether a stock has the momentum to turn upwards. The combination of the two can create the best tool for grabbing rebounds. Specific application principles:
1. Set the parameters of BIAS indicator to 24 days and KD indicator to 9 days; 3. 3.
2. The BIAS indicator should be less than -6, which is only a preliminary condition for confirming the oversold of the stock.
3. The KD indicator generates a golden cross, with the K-line crossing the D-line.
When crossing KD, the D value in the KD index should be less than 16.
Deviation rate (BIAS)
Deviation rate, abbreviated as Y value, is a technical indicator derived from the principle of moving average. Its function is mainly to measure the degree of deviation between the stock price and the moving average line during the fluctuation process, in order to determine the possible retracement or rebound of the stock price due to deviation from the moving average trend during severe fluctuations, as well as the credibility of the stock price moving within the normal fluctuation range to continue its original trend.
The principle of measuring market divergence is based on the fact that if the stock price deviates too far from the moving average, regardless of whether the stock is above or below the moving average, it may tend towards the average. And the divergence rate represents the percentage deviation of the stock price from the trend indicator.
1. Calculation formula
Y value=(closing price of the day - moving average closing price within the day)/moving average closing price within the day 100%
Among them, N days are the setting parameters, which can be set according to the number of moving average days selected by oneself. Generally, they are divided into 6 days, 12 days, 24 days, and 72 days, and can also be set as 10 days, 30 days, and 75 days.
2. Application principles
The deviation rate is divided into positive deviation and negative deviation. When the stock price is above the moving average, its divergence rate is positive, otherwise it is negative. When the stock price is in line with the moving average, the divergence rate is 0. With the strength and fluctuation of stock price trends, the divergence rate repeatedly shuttles above and below the zero point, and its value has a certain market measurement function for future trends. Generally speaking, when the positive power to deviation ratio rises to a certain percentage, it indicates that there is a greater possibility of long positions taking profits in the short term, indicating a sell signal; When the negative power deviation drops to a certain percentage, it indicates a greater possibility of short covering and a buy signal. There is currently no unified principle for determining the correct buying or selling point based on the degree of multiplication and separation. Users can draw a comprehensive conclusion based on their observation of the market strength and experience. Generally speaking, in a rising market, if there is a negative power deviation, it is advisable to buy along with the downward trend because the entry risk is low; In the trend of a general decline, if there is a divergence between the positive and the negative, one can wait until the high price rebounds to sell their holdings.
Due to the different divergence rates of stock prices relative to the moving averages of different days, except for sudden spikes or drops that can cause the divergence rate to reach a high percentage, the divergence rates in the short, medium, and long term generally follow a regular pattern. The following is the reference data for foreign moving averages of different days to meet the requirements of buying and selling news signals:
6-day average deviation: -3% is the buying time, 3.5 is the selling time;
On the 12th, the average deviation is -4.5% for buying opportunities and 5% for selling opportunities;
24 day average deviation: -7% is the buying time, 8% is the selling time;
72 day average deviation: -11% is the buying time, 11% is the selling time;
In individual stocks, whether it is an uptrend or a downtrend, as long as the trend is stable, the deviation rate will fluctuate within a normal range. If it exceeds the normal range, it can be considered that the deviation rate is too large, and the stock price will approach the moving average line. Due to the different stock prices, the normal fluctuation range cannot be determined, but the fluctuation range of individual stock deviation rate can be seen in computer charts. The other patterns are roughly the same.
Trend indicator
1. MA (Moving Average)
Classification of Moving Average:
According to different data processing methods:
Arithmetic Moving Average (SMA)
Weighted Moving Average (WMA)
Exponential Smooth Moving Average (EMA) is commonly used in practical applications
According to the length of the calculation period:
Short term moving averages (5-day, 10 day) - Fast MA
Mid term moving averages (30 day, 60 day)
Long term moving averages (13 weeks, 26 weeks) - Slow MA
Basic idea: Eliminate the influence of random stock price fluctuations and seek the trend of stock price fluctuations.
Features: Tracking trends Lag Stability Helping to rise and helping to fall Characteristics of support lines and pressure lines.
The application rule of MA: Granville's Law ("Eight Buying and Selling Rules of Moving Average") - based on the deviation relationship between securities prices (or indices) and the moving average as the basis for analysis. (4 buying rules, 4 selling rules)
The main drawback of the Granville rule is that it does not explicitly state how far away investors can buy and sell when the stock price is from the moving average, which can be compensated for by the divergence index.
The combination application of MA:
Golden Cross "and" Death Cross "(breaking through the pressure line upwards or the support line downwards): When the current price is firmly above the long-term and short-term MA, and the short-term MA breaks through the long-term MA upwards, it is a buy signal; If the current market price is below the long-term and short-term MA, and the short-term MA breaks through the long-term MA again, it is a sell signal.
Combination use of long, medium, and short-term moving averages
2. MACD (Moving Average of Exponential Smoothing Differences and Similarities)
Composed of positive negative difference (DIF) and mean of similarities and differences (DEA), DIF is the core and DEA is the auxiliary. DIF： The difference between a fast smooth moving average and a slow smooth moving average.
Application rules:
The values and relative values of DIF and DEA
、 When both DIF and DEA are positive, it belongs to a bullish market. The upward breakthrough of DIF over DEA is a buy signal; If DIF falls below DEA, it can only be considered a pullback and profit taking should be taken.
、 When both DIF and DEA are negative, it is a bearish market. The downward breakthrough of DIF over DEA is a sell signal; The upward breakthrough of DIF over DEA can only be considered as a rebound, temporarily filling the gap.
When DIF falls below the 0 axis, it is a sell signal, indicating a death cross between the 12th EMA and the 26th EMA; When DIF crosses the 0 axis, it is a buy signal, indicating a golden cross.
