4. Wait for the confirmation of the trade
Do not blindly accept signals of the Dynamic RSI and the Center of Gravity & Timing.
Yes, the quality of these indicators is fine but suppose these indicators suggest to go short on Yahoo! and Microsoft decides to launch a takeover bid.
In that case there is little chance the price of Yahoo! will drop!
Traders do want the signal to be confirmed. If the indicators tell the trader to sell, the trader will patiently wait until the stock really drops. Then, he will open his short position.
See an example below: BHP Billiton is clearly in an overbought zone. The Center of Gravity & Timing and the Dynamic RSI indicate the overbought status.
The trader waits for the price to drop. He enters a Stop Sell order below the lowest price of the preceding day. So, when the price really drops, the short position will be opened.
Another example below: Invensys is clearly in an oversold zone. The Center of Gravity & Timing and the Dynamic RSI indicate the oversold status.
The trader waits for the price to rise. He enters a Stop Buy order above the highest price of the preceding day. So, when the price really rises, the long position will be opened.
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