Frequency of occurrence matters.
Gauge the frequency of occurrence of bullish or bearish events as defined inside your expert advisers.
Asses the balance of bullish or bearish occurrences of any expert adviser, over any period of time in any time frame. The consensus report formula is:
- If bearish occurrences outnumber bullish occurrences:
-1 + (bullish #)/(bearish #)
- If bullish occurrences outnumber bearish occurrences:
+1 – (bearish#)/(bullish #)
Consensus reports in fact identify when things are becoming extreme and thus when a market move is becoming overextended and due to either cool off or reverse. They are normally used as an “early warning system”.