What is BIAS? How to set the deviation rate and how to use it.

The Bias Ratio (BIAS) is a technical indicator that shows the percentage deviation between stock prices and the Moving Average. It serves as a criterion for determining whether a stock is overbought or oversold. It's simple but surprisingly useful.

Calculation formula for deviation rate

N-day BIAS = ( closing price of the day - N-day Moving Averages ) / N-day Moving Averages

It's a bit mathematical, but actually simple.

How to Set the BIAS Deviation Rate

1. Moving Avarage period selection: Short term is 5-12 days. Medium term is 20-60 days. Long term is 120-240 days.

2. Parameter N: 6-day, 12-day, and 24-day are commonly used. You can choose according to your preference.

It should be changed according to the characteristics of the asset. The market atmosphere is also important.

How to Find Trading Points

Set the threshold. For a 5-day deviation rate, it's about 2%-3%.

Is it time to sell if it swings too much to the positive side? If it swings to the negative side, it might be a good time to buy.

Looking at multiple Moving Averages, I feel like I can somewhat grasp the overall picture.

Divergence occurrence is a point of interest. It may be a sign of trend reversal.

In the analysis for 2025, positive divergence seems to be important. It looks good to look at it together with RSI and MACD. If the stock price is falling but the indicators are trending upward, it might be a turning point.

Limit Point

If the rise and fall are gentle, it is not very useful.

The signal comes out a little late. You might miss the opportunity.

The effects differ between large-cap stocks and small-cap stocks.

Points to Note When Using

Combine with KD and Bollinger Bands. It's dangerous to rely on just one.

Choosing parameters is important.

It should be differentiated by the brand. Flexibly.

In the end, BIAS is a useful tool, but relying solely on it is a no-go. It seems that the best practice is to make judgments in conjunction with other indicators.