And to also add.... Divergence is wonderful in hindsight... Sort of like printing out and taking a chart with moving average cross-overs to a cocktail party...amaze the uninitiated as to how they can get rich quick...NOT.... Price action works....save the indicators for those still fond of kool-aid...
Excuse me, but that's rubbish. I have carried out a vast research on divergences, 80% of my trades are divergence based. Research and master is key. What you say is nonsense as I manage to prove you wrong on most days and times that divergence do not offer the benefit the risk is way below potential reward. Anyway, ImE you are mistaken. How did you arrive at the "fatal" event? You have to implement appropriate risk control measures after considering what the potential average reward is statistically.
Fellas, fellas fellas There are a million ways to make money in the markets. Who care so long as you follow your game plan in a consistent disciplined fashion and manage your risk ... trading is a lot more about that than what particular mode of entry/exit tickles your fancy. I
Identifying divergences whilst they are in the making requires similar skills as a photographer has, you have to be quick (depending how short time frame you are trading) sometimes take quite a few shots, some will be not worthy, but 1 will be a money earner. Quite a few of us will look at a great shot and make a comment to ourselves that we could have taken a similar shot (hindsight), but in life to achieve something close it takes skill. System vendors (non genuine ones) will try and sell to us a turnkey package which after reading you ought to be able to make a killing, not so, it takes bloody ages to get to the level which will seem only achievable in hindsight to others.
Well, keep smiling and I am glad you are happy. I am with you on not making flat statements...especially in regards to trading....however... I object to those who make it appear they use divergence ONLY....and then show only winning trades in the charts they post here.... I think I know as much or more about regular and hidden divergence as most who post in ET....Lord knows I have contributed the tuition...it is a completely different kettle of fish when trading real time...it looks like you have hidden divergence.......for example, stoch and macd making a higher high....price making a lower high .....you go short.....and then oh sh*&t...price continues it's ascent after stalling....erasing the divergence....uh, but, I am SHORT!!....well, cover that loser big boy and let's move on to the next one....happens all the time.....and also with regular divergence....we won't even mention the two times and three times regular divergence that are commonplace....do you really have the gonads to put on that third trade after getting stopped out of the first two divergent losers in the same cycle?.... So, if you are winning with divergence....good for you.....but I would be willing to bet it is an aid to your decision making and not your sole reason for taking a trade... And if I am wrong....perhaps you can teach me something about divergence! Best Wishes,
I myself have found it very useful to study price and volume, aka Wyckoff, and to confirm volume with MACD. These 2 together provide very good divergence set ups.
Yeah, I personally agree with you HoustonMark, but JP seems to make it work for him ... probably because he doesn't rely on it so much on an intra-day level as he does to get a macro view (daily/weekly) and then hone in on his intra-day trades ... so yeah, you're right again. Have a great 2008, I
So Icarus...help me understand.... You just jump in anywhere, long or short, and then employ discipline and risk management to avoid blowing up your account? I must admit this is one thing I haven't tried. Would a simple coin toss suffice or should I try a slightly more enlightenend entry technique?