Strongly agree...no point in helping nor discussing it with someone that saids it doesn't work. However, what I'm saying if someone saids it doesn't work, shows examples of such and specifically ask for help in understanding what went wrong... That's a different story. Mark
Sure, I know how you work with people. BTW I just had a losing divergence based entry trade, I knew it was not the best of set-ups, so I reduced position to 1 fDAX lot and got stopped out for -5 points, but +73.5 Gross for the day, 4 win/2 loss/1 b/e.
Another live trade posted in DAX thread, yet another reduced size position, very obvious bullish divergence. Check time stamp vs chart if you have fDAX data. <img src=http://www.elitetrader.com/vb/attachment.php?s=&postid=1727223>
So it looks like once you see the divergence you dont place the trade until the macd crosses the line? thx again jim
No Jim, I track mostly histogram so it is histogram that has to kiss its centreline, not MACD signal or average. Sometimes I'll enter off MACD, mostly not though. That trade I closed for -6 loss reduced position size, still up substantially today. Right now monitoring possible 3 min based divergence entry, a triple one.
This thread started talking about hidden divergences and now is about regular divergences. JSSPMK, how do you relate what looks like 1-min, 2-min, 3-min, ect charts to each other? (From the Dax thread). Do you take whichever one is showing a good divergence at the time? And can I ask what moving average is in your price chart?
What I do is always 'trade what I see', no bias in daytrading, my trigger is always 1 minute chart, I hope that's self-explanatory. I mostly trade divergencies from 1 to 10 minute time frames. I don't agree with traders that state time based charts are a thing of the past, still doable. I guess your Q is about what do I do if there is a bearish divergence on 10 and a bullish one on 1 minute charts? The answer is simple, I trade the most immediate case, that being 1 minute one, at some point when it starts running its course and 1 minute chart starts showing exhaustion then I will consider reversing and going Short off 10 minute chart's bearish divergence. I must stress that I only turned profitable when I started scaling out of a position. Take it as you will, some are against scaling out, all I can say that as long as it works it's fine to scale out. I play mini trends, so there is a clear necessity to scale out as I have no idea at which point in time that mini trend will end and change or perhaps buy programs might kick in and something that started out as a small bounce leads to a much bigger gain due to a reversal. So my average day goes something like this: Long - Scaled out 2/3 +8 - Stopped 1/3 b/e; Short - -3; Short - -3.5; Short - Scaled out 2/3 +10.5 - Stopped 1/3 - 0.5; Long - Scaled out 2/3 +8 - Trailed 1/3 +30 etc. Today's results were: Winning trades: 6 Losing trades: 9 B/e trades: 1 +100.5 (fDAX) Gross.
Sorry to offend. I just know through my own 12 plus years of research that divergence, convergence, hidden divergence, reverse divergence or whatever the flavor of the month is . . . it is an inconsistent indicator. I can imagine that if 80% of your trades use some sort of divergence that only a percentage of them are profitable so that diminishes the percentage further. On top of that if 80% of your trades use divergence as a trading indicator then the other 20% do not. That logically means that 20% of the time that divergence isn't useful. My point simply was that if one played Russian Roulette and landed on that 20 percentile . . . they would be dead. The fatal statement is also metaphoric for "psychologically fatal" as well. We trade based on confidence and anything that wavers are rock solid confidence is crippling over time. If you use it and are happy that is fine. To each their own. I just choose not to use something to confirm trades that isn't more consistent than that.
Not offense taken No, you have to treat 80% as 100% and then apply 75% win rate. Same goes for 20% of other set-ups, you have to treat 20% as 100%. Sounds like you have found some sort of Holy Grail my boy, well I haven't, so I had to learn to embrace/accept consecutive losses and learn to trust backtested stats, which would inevitably change through time as you are well aware. And a controlled loss is hardly a bullet to the head LOL. You made a comment about divergencies mostly working in hindsight, if you can see it after the fact, that means that you can learn to see it in the making and applying risk management and range expansion analyses you can make it work. I didn't say it was an easy ride, a lot of hours went into this.