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BIAS deviation rate

1. Introduction

Deviation refers to the gap between the market index or closing price and a certain moving average price to reflect the degree of deviation of the price from its MA in a certain period of time. The moving average represents the average cost of investors, and the deviation rate can represent the average return of investors. The application of deviation rate, retracement or rebound of the market can often be easily grasped, increasing profit opportunities. In addition to being applied to individual stocks, it is also of reference value for judging the ups and downs of the market index. BIAS1, BIAS2, and BIAS3 correspond to the 6th, 12th, and 24th, respectively.


2. Calculation method

BIAS = [(Closing price of the day - Average price of N days) / Average price of N days] * 100%


3. Application

3.1 It is better to sell when the deviation rate is too high; to buy when the deviation rate is too low.

3.2 When the deviation rate continues to be "+" (positive number), it means that the market is on an uptrend, and it is more advantageous to buy long; when the deviation rate continues to be "-", it means that the market is in a downtrend and should be sold on the sidelines or rolled over. Empty.

3.3 If the deviation rate is too high, you should prevent it from falling or going back. When the deviation rate is too low, you should pay attention to a rebound or rebound to avoid losing profit opportunities.

According to the inertia of China’s stock market, under normal circumstances, the 10-day deviation rate of the index is mostly between "+4% to-4%", but because the short-term is more prevalent, the 10-day deviation peak can be set at "±7%" or more.

3.4 The deviation rate of more than 8% on the 10th is an overbought phenomenon and can be sold; a deviation of -8% or more is an oversold phenomenon and can be bought.

3.5 The 30-day deviation rate is more than 6%, which is an overbought phenomenon and can be sold; a deviation of -6% or more is an oversold phenomenon and can be bought.

3.6 Using two different time deviation rate curves, you can follow their crossing lines as observations of buying and selling points.


4. Features

4.1 Deviation rate can assist the shortcomings of the moving average.

4.2 Moving average represents the average cost of investors, and the deviation rate can represent the average return of investors. A positive deviation rate indicates that the investor is profitable; a negative deviation rate indicates a loss.

4.3 Unusual positive deviation rate, do not buy long easily; do not sell short for unnormal negative deviation rate.

4.4 General speculative stocks or stocks that have risen and fallen sharply are not suitable for analysis by the deviation rate. When stocks rise and fall sharply, the deviation rate will have extreme values, and speculative stocks are speculative due to artificial speculation. The positive and negative values of the deviation rate have been higher than the deviation rate of ordinary stocks, so these two types of stocks are not applicable.

4.5 At present, various economic and financial newspapers, such as Business Times, Economic Daily and other newspapers, calculate the index and the deviation rate of each stock every day, saving investors the trouble of calculation. Therefore, the deviation rate can be regarded as a simple and reference technical indicator.

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