In the present article, we estimate the effectiveness of the “Profitunity” trading system by Bill Williams. We will assess the effectiveness of the trading system both as a whole and its separate signals.
In our study, we suggest examining the last of the listed types of oscillator signals: «overbought and oversold». And we explore this signal with a complex approach by using several popular oscillators in our analysis at once.
There are many ways to determine a reversal and correction in the motion of the quotes of financial instruments.
In the proposed research, we want to highlight and test such a well-known signal as the bounce from the 200-Day Moving Average.
There are many ways to determine a reversal in quotes flow of financial instruments. Among them, the most effective method is divergence. Divergence occurs when the price moves in the direction opposite to the technical indicator in the stock market. If a financial instrument shows new peaks or troughs on the chart and the indicator does not draw similar peaks, so it certainly implies a discrepancy between the price and the indicator readings. The resulting discrepancy is usually considered to be a reversal signal. In our study, we take one of the most popular oscillators, the RSI indicator. The RSI can track the quotes fluctuations and set its own minimum and maximum scales.