First, deviate from the principle of exponential formula.
According to the relationship between market price and technical index, the dispersion index formula is analyzed. The principle is that when the market price deviates from the index, it may mean that the market trend is about to change. Deviation can be divided into positive deviation and negative deviation.
Positive deviation refers to the price hitting a new high or a new low, but the index fails to reach the corresponding high or low. This may indicate that the market is about to rebound or callback. Negative deviation is the opposite, the price is at a new high or a new low, but the indicator fails to confirm the price trend, which may indicate that the market is about to reverse.
Deviation from the index formula is usually shown in the auxiliary diagram, so as to observe the difference between price and index more clearly.
Second, the application of deviation index formula
The deviation index formula can be applied to various markets and time periods. It can be used to analyze financial markets such as stocks, foreign exchange and futures, and can also be used in different time periods, such as daily, weekly and monthly lines.
The application steps of deviation index formula are as follows:
1. Select appropriate technical indicators: The commonly used technical indicators that deviate from the indicator formula include MACD, RSI and stochastic indicators. It is very important to choose the technical indicators that suit you. Different indicators are suitable for different markets and time periods.
2. Observe the relationship between price and index: by observing the trend of price and index, judge whether there is deviation. It is deviating from the need to pay attention to the new high or low price, and the indicator fails to confirm the trend; Negative deviation is the opposite.
3. Confirm the departure signal: When the departure is observed, it is necessary to confirm the validity of the departure signal. It can be confirmed by other technical analysis tools, such as trend line, support level resistance level, etc.
4. Formulate trading strategy: According to the confirmation result of deviation signal, formulate corresponding trading strategy. For example, when a positive deviation is observed, you can consider contrarian trading, that is, buying or selling when the market reverses.
Third, the chart display of deviation index formula
Here is a concrete example to demonstrate the use of the dispersion index formula. We choose MACD as the technical indicator and take the daily chart as an example.
We draw MACD indicators on the subgraph. Observe the relationship between price and MACD. If the price reaches a new high and MACD fails to confirm this trend, there may be a positive deviation. On the contrary, if the price innovation is low and MACD fails to confirm this trend, negative deviation may occur.
We need to confirm the validity of the departure signal. It can be assisted by other technical analysis tools, such as trend line, support level and resistance level. If other analysis tools are used to deviate from the resonance of the signal, the validity of the deviation signal will be higher.
According to the confirmation result of deviation signal, the corresponding trading strategy is formulated. For example, when a positive deviation is observed, you can consider contrarian trading, that is, buying or selling when the market reverses. In the actual transaction, it is necessary to make a comprehensive judgment by combining other factors.
4. Deviation index formula is a tool of technical analysis, which can judge the turning point of market trend by comparing the difference between price and index. It can be applied to different markets and time periods, and can be used in combination with other technical analysis tools. In actual trading, it is necessary to comprehensively consider factors such as deviation signals and formulate corresponding trading strategies.
Using auxiliary graphs deviating from exponential formula can help us to judge the turning point of market trend more accurately and improve the success rate of trading. However, it should be noted that technical analysis tools are only auxiliary tools and cannot completely replace the analysis and understanding of market fundamentals. When making trading decisions, we should comprehensively consider various factors and maintain a cautious and rational attitude.