Using overbought/oversold indicators - II

[Shantanu]

One of the reasons why transactions based on these indicators can not
be taken against the trend, being that these indicators can remain in
the extreme region for a long time along the trend. Many a traders,
including yours truly, have tried to take these extremes and trade
against the trend to our grief.

So never use these indicators against the trend, unless you have
reasons to believe the market is in a range. For range trading these
indicators may be used both ways.

But of course when is the market in a range? and by the time we
realize so may be it is time that the range is broken and a new trend
starts?

So always take the signals of these and any other indicators with a
pinch of salt and do, please DO provide special attention to the
prices itself. After all prices are the primary data and indicators
are derivatives.

And we all have seen how derivative trading can land the bigg
operators also in a soup.