Technically, shouldn't the short position be closed at "no edge"??? That is one other problem, there is no exit rule for the "strategy". Sure he enters when there is an edge, but what is the rule for exiting the position?? I would say once it goes to neutral or no edge, it should be closed...
No, you just dial out to a longer time frame. When traders get into a losing position they are always scrambling to find the right time frame to justify staying in their position. It's a akin to a trader who gets long as a trader and stays long as an investor when the market tanks. This is why there is now 6 levels of FV. Just keep adding more to complicate things.
SPX, 1238.25. FV, 1125.96. OFV, 1242.32. There is still a slight upward bias in the short time frame (OFV), but it is getting increasingly narrow.
Looking back, the original posts in this thread are a great loopback on what us and other floor guys and firms went through..