Emini Pattern Divergence Journal

Discussion in 'Journals' started by no_pm_please, Aug 21, 2003.

  1. This journal is going to track a method of divergence trading for the Emini using two patterns for the entry. Since the other method in the Emini Divergence Journal hasn't been giving signals for a few days, I thought I'd add this method to track. I use both of these together. It takes some practice to understand, however
    it doesn't take much time to use. This method uses discretion. If that bothers you, don't follow it. I'll explain everything used in the method, show where discretion is used, and track the results in realtime.

    Note: (Screen setup is the same as the Emini Divergence Journal)

    My setup for following this method uses eSignal as the datafeed, SP 5 min. bars for tracking, and Tradestation 2000i for charting.
    It uses three indicators 1). the 20 period Keltner Channel with 2.5 ATR band; 2). the Chaikin Oscillator using 3 for fast and 10 for slow and the tick volume as the data; 3). the 14 period ADX.


    The trade entry setup is defined by double tops or double bottoms with volume divergence. Double tops are shorted if todays high is below the previous days high. Likewise, longs are taken if a double bottom is above the previous days low. If the ADX is above 30 at the time of the first bar of the double top, then double tops can be shorted even when the high is above the previous days high. Likewise, if the ADX is above 30 then double bottoms can go long even when the double bottom is beyond the low of the previous day. Discretion is used to define a double top or double bottom. The trigger for the entry is the first close below the second top close for shorts or above the second bottom close for longs. At the time of the entry, there must be clear divergence between the Chaikin Oscillator and the double top/bottom formation. If the divergence isn't clear, then either wait for a triple top/bottom formation with clear divergence or abandon the trade. Discretion is used for this. The stop loss point is one tick above the highest high or one tick below the lowest low of the two bars used for the double top/double bottom. After entry and after one retest of the entry, the stop is moved to breakeven as soon as the pivot point of the retest is crossed. After each successive retest, the stop is moved to one tick above/below the pivot bar of the retest. Discretion is used to define pivot bar high/low points. The basic profit exit is the bottom of the Keltner Channel for short entries and the top of the Keltner Channel for long entries. The pivot points are used for followup instead of the Keltner Channel brackets if the market is setting highs/lows outside of the two day range.

    I'm getting tired now so I'll continue with how I semi-objectively look for double tops/bottoms and step by step walkthroughs on some trades tomorrow. This seems confusing for me to read. I hope going over a couple of trades will make it clearer. Please hold off on questions until I've posted at least one trade.
  2. mark1

    mark1 Guest

    I'm sure this will be another great thread.
    Thanks :)
  3. When will this journal continue ?

  4. No_pm_please stated on another thread that he's currently suffering from mononucleosis. I suspect he's focusing his energy on getting healthy right now.

  5. Oh.


    Best wishes to him.
  6. I hope No_Pm_Please gets well soon. I was trying to follow his method of double tops and bottoms today. There was a nice triple top this afternoon with divergence between the peaks at 2:30 and 3:05 pm eastern time which would have made a nice short signal. However the short signal for entry at 3:10 pm at about 999.5 was way under the top keltner channel. No_Pm didn't say anything for his second method about whether he looks at how far the price is into the keltner channel when entering. Would anyone have an opinion about this?
  7. MarkB


    Actually, since he asked us to withold questions until he can show us examples of this method in action, I doubt that it makes too much sense to speculate about it right now.

    I certainly appreciate your eagerness though!