How to spot when someone is over or under-graded

Have you ever noticed that some players have got these enormously high grades that even a super grandmaster would be proud of?  Well, these grades are impressive and the people with them have obviously worked very hard for them. However, to what extent should we be concerned when we face them over the board? 

I always look at the average grades of their opponents to start with, then on whether or not they are fast improvers (the extent to which their grades have improved against recent relatively 'more able' opponents - but again we bear in mind the general grade disparities). 

In addition, I have a rough formula based on my observations and it goes like this:  own grade - average opponent's grade = x (where if x =  a difference of less than 500 points, their grade falls within normal boundardies and are fine.  If the difference is more than 500 points they may be considered overgraded.  However, this, like Kotov's list of 'temporary advantages/disadvantages', may only persist for short periods, so don't reach for the pills! 

 Again, this is not to say that someone won't be having a bad patch or is 'on a roll'. However, when everything is taken into account we can determine, for ourselves, whether we should run for the hills when faced with certain opponents or take the battle to them with a measure of confidence.

Does this mean that when, as an 1800 player, you are faced with a 2979 player do you, use the rough formula, smirk and proceed to play them with confidence and even gay abandon?  No, they will kill you!  Mind you they will, in all probability kill you anyway, but you would have conducted a worthwhile exercise!   Oh, and does the rough formula include the titled players? Of course not! There is an apocryphal story featuring Fischer, who had white and another well known grandmaster. Fischer played his favourite: 1.e4 whereupon the grandmaster immediately resigned complaining that the move was too strong.