What was interesting is in theory the OSI, a proprietary indicator, acted as a noise trading indicator, able to profit in times of non-linearity, or during see-saw trends in the market for the Euro. And, the sentiment proxy from SMA, was able to capture a greater risk-reward ratio then a non-directional Euro from 2014 to 2016.
Here's the EUR/USD chart for the corresponding time period of the study:
Now, to introduce the signal detection theory, it's important to note that this perception science has everything to do with signals presented, and signal responses. Similar to getting an eye exam, where the optometrist presents a series of signals on an x-y coordinate, the signal detection theory tests whether there were matching responses (a "hit"), or a failure to recognize the signal (a "miss"). Whats more, th…