Getting NFV and SPX to converge is going to take a colossal day. Today could have been it, but all rallies are being sold into.
This day almost qualifies. Another 15+ handles would have been more satisfying. NFV goes out at 1101.03, SPX at 1060.27.
you have been playing around with this for a while, are you taking any trades on the signal? you would have made a tidy sum on the divergence.
the reason I ask is I struggle with the same issue, taking a strongly trending signal on the lower time frames puts you at the mercy of the longer term time frames or as market profile says "the other time frame " traders. failed signals is part of the business, good luck with your trading.
Thanks. I have a different view since I am mostly contrarian. I believe that adding to trades and peeling off positions is very important, your position is like an onion that is growing and getting smaller all the time. As I mentioned on Fractional Kelly, you want your biggest position on when you have galactic edge like we just had at like -70. At -70, we would be close to getting stopped out (because we would add at -24 and -3x, etc and getting killed) regardless of edge (using the 1% of equity rule for stop loss). That is why it is important to understand: a) What is a rare event from the point of view of your system, and be ready to act with more aggression here. But minding, b) That fat tails can take anybody out of the game no matter how good you are, and therefore self preservation is more important than gain over long time periods. These two are the hardest (opposing) forces to manage once you are confident in your trading signals, imo. If you are not a contrarian you can add to a winning position instead of a losing one, and exposing yourself to blow out is greatly reduced, a tremendous edge on it's own. The difference is that you would be super busy on that one day, and the other days you would be taking lots of small loses and going home a loser on most days. If you are good, that one day makes it all worth while.