For me, I keep the SSI indicator very simple.
If the market overall is trending and not range bound, I look this indicator for a general bias. Then I turn to my technical indicators to actually enter a trade.
Exactly how I use SSI, personally
But here's the simple way that I use SSI. If a pair has an extreme reading of +3.00, then I get ready to short the pair (since its a contrarian, "buck the crowd" type of indicator).
When a pair gets to -3.00 or greater, I get ready to look for buy signals on my technical charts.
The basic thought behind SSI
The basic thought behind the SSI is that, "Crowds are generally wrong in their analysis". Therefore if they are "bent on being largely on one distinct side of the pair", then it may pay for me to be on the opposite side of their trade, since they are wrong so often.
After all, they are saying, "It has gone up too far, it has to come down...so I'll short". OR "It has gone down too far, it has to bounce higher, so I'll buy".
They are trying to catch a top or a bottom rather than simply going with the trend that already exists. It's always easier to go "with the flow" than "against it".
Manage your risks on any indicator!
Remember to use good risk management with any type of trading signal. In other words, if you were to get stopped out on the trade, you should only lose 1-5% of your account balance. That's good risk management.
Hope this helps. Let me know what you guys think.
