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Deviation Rate (BIAS)

2022.11.6 MEXC
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Definition

BIAS refers to deviation rate, which indicate the degree of deviation between the crypto closing price and its moving average in a certain period. It is calculated in terms of percentage difference. To some extent, the moving average of one certain cryptocurrency’s price is the cost that traders are willing pay. The deviation rate represents the average return for each investor.

How to use it on MEXC trading platform?

BIAS indicator can be above zero, below zero or zero itself:

  1. If one crypto price is moving above its moving average, BIAS value is positive.
  2. Instead, When the price is falling below the moving average, the value is negative.
  3. However, if the price is consistent with the moving average, the value is exactly the zero.

Entry Points

  1. Bullish Trend

When the BIAS is below the negative parameter, this is a buy signal since the target crypto has been oversold. Traders can open a calling financial position.

  1. Bearish Trend

When the BIAS is above the positive parameter, this is a sell signal since this asset has been overbought. This can be regarded as a put opportunity.

Advantages vs Disadvantages

  1. BIAS can assist the shortcomings in trend indicators, such as moving average. It is because that it can reflect overbought and oversold areas.
  2. BIAS cannot show the exact points for calling and putting.
  3. BIAS is ineffective for speculative cryptocurrencies. Those assets fall and rise so sharply that BIAS rate will have extreme values.
  4. If BIAS value is 0, the price will move in sideway.
  5. The cross of BIAS lines can be analyzed as moving average cross.

 

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