1. Understand BIAS deviation rate
BIAS, the Chinese name is deviation rate, which indicates the deviation of the stock price from its MA moving average within a certain period. The theoretical basis of this indicator is that if the stock price deviates too far from the moving average, it will eventually move closer to the moving average, regardless of whether the stock price is above or below the moving average.
Deviation rate = (closing price of the day - moving average price within N days) / moving average price within N days * 100%.
By connecting the BIAS values, the deviation rate curve displayed on the stock trading software is obtained. When N has different values, different BIAS lines can be drawn.
Taking the computer version of Jindouyun Intelligent Investment software as an example, if we open a stock at will and set three N values of 6, 12, and 24, we can get three deviation rate curves. These three curves represent the distance from the current stock price to the 6-day moving average, the 12-day moving average, and the 24-day moving average respectively.
In practical applications, how much N should be set, and which deviation rate curve is specific, can be determined according to one's own investment preferences. Short-term investors can set a smaller value, and long-term investors can set a larger value.
2. Use the deviation rate skillfully to capture trading signals.
The deviation rate can be divided into positive and negative. When the stock price is above the MA, the deviation rate is positive, otherwise it is negative. When the stock price is consistent with the MA, the deviation rate is 0. As the stock price rises and falls, the deviation rate shuttles above and below 0 points repeatedly, and its value has a certain predictive function for future trends.
When the positive deviation rate reaches a certain level, investors will make enough profits and easily have the idea of making money and leaving, and the stock price will fall subsequently. Therefore, generally speaking, when the positive deviation rate rises to a certain percentage, it is a sell signal.
When the negative deviation rate drops to a certain percentage, investors will suffer heavy losses, bottom-buying investors will rush in, and the stock price will rise subsequently. Therefore, when the negative deviation rate drops to a certain percentage, it is a buying signal.
There is currently no unified principle for the specific deviation rate to be the correct buying point or selling point. Users can draw comprehensive conclusions based on their experience in viewing charts and their judgment of the strength of the market.
The following are the buying and selling signals of Shanghai and Shenzhen stock index deviation rates for different days, for reference only:
6-day moving average deviation: -3.5 is a buying opportunity, 5.5 is a selling opportunity;
12-day moving average deviation: -5 is a buying opportunity, 6 is the time to sell;
24-day moving average deviation: -5.5 is the time to buy, 6.5 is the time to sell;
50-day moving average deviation: -7.5 is the time to buy, 14 is the time to sell.
Okay, let’s stop talking about the knowledge about BIAS deviation rate. See you in the next class!
Risk warning: The above methods are for reference only. When investing in stocks, you still need to make a comprehensive judgment based on other information. The stock market is risky, so you need to be cautious when investing!