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Pair Divergence Method

  • #841
  • Jan 8, 2010 10:45am Jan 8, 2010 10:45am
Quoting cosgrove
There were a few other setups today that didn't make the 1 pip difference rule.
What is that "1 pip diff. rule"?
One Chart is Worth Ten Thousand Words.
  • #842
  • Jan 9, 2010 12:41am Jan 9, 2010 12:41am
Quick explanation of "1 pip difference":

This method is centered around the concept of a "higher high" on one pair (example, U/C) vs. a "lower high" on the matching pair (example, E/U), or a higher low vs. lower low. Sometimes when you look at a chart, you will think there is a higher high/lower high by visual inspection; however, if you were to look in the "data window" of mt4, you would see the values are really equal.

Example: you look at the chart, and your U/C overlay looks like it made a higher high, while the E/U MA looks like it made a lower high. In this example, you would want to sell E/U short. You decide you want to double check and look at the actual values for the highs on both pairs, and you find that while the second U/C peak looks higher, it is indeed the same value as the first peak. This would rule out the trade for me, as it is not technically a "higher high," as it needs to be higher by at least 1 pip to be a valid trade.

Sorry I can't post a chart right now, having data issues
Hindsight is 20/20
  • #843
  • Jan 9, 2010 8:52am Jan 9, 2010 8:52am
Thanks for making the 1 pip clear

I'm realy getting into this style of trading
I'm new to it and experimenting but I was 8 wins 0 losses this week

Maybe mostly luck but I hope some thought and skill was invoulved lol

Thanks Bill for this method

I still get confussed at times about the lower high and higher low

One question I do have is

Do the rules stay the same no matter if the pair is negatively corralated or non negative corralated
  • #844
  • Jan 10, 2010 1:02pm Jan 10, 2010 1:02pm
Oops, I should have clarified that my last post is only valid when the overlay is inverted (which is how it looks in my charts), due to U/C and E/U being negatively correlated.

dryclean, how have you been taking profits? 2xATR or what?
Hindsight is 20/20
  • #845
  • Jan 10, 2010 1:38pm Jan 10, 2010 1:38pm
I've been using an EA called e-trailing. I have it attached
I have the EA set for a 100 TS with a 30 step.



I'm playing off the 15m TF. If I'm in profit by 40 pips (5 didget broker) I will check the 1m and 5 min TF If I get a feeling it's gonna turn I'll set a TS of 30.


Not using the ATR
I might do better using the ATR but I'm just trying to get a feel for correct entries

I'm a pig not a hog
Pigs get fat Hogs get slaughtered
Attached File(s)
File Type: mq4 e-Trailing.mq4   3 KB | 444 downloads
  • #846
  • Jan 10, 2010 1:39pm Jan 10, 2010 1:39pm
[quote=cosgrove;3353828]Oops, I should have clarified that my last post is only valid when the overlay is inverted (which is how it looks in my charts), due to U/C and E/U being negatively correlated.

So the rules DO stay the same no matter if the pair is negatively corralated or non negative corralated
  • #847
  • Jan 11, 2010 9:21am Jan 11, 2010 9:21am
The idea of divergence stays the same no matter what you're trading. It just gets tricky to talk about it when things are inversely correlated.

Quoting dryclean
If I'm in profit by 40 pips (5 didget broker)
I don't know about the rest of you guys, but a pip to me is 0.0001 on a USD based pair, or 0.01 on a JPY based pair...let's try to keep the discussion that way unless I've been out of the loop and the FX community has changed the definition...
Hindsight is 20/20
  • #848
  • Jan 11, 2010 9:27am Jan 11, 2010 9:27am
Big mess this morning. Would have resulted in four transactions for me: buy (09:45), cover (11:30), buy (12:30), cover (14:45). Net loss of ~half a position. There was a buy signal on the U/C 1h at 13:00, but I think the 30m signal at 12:30 took precedence and was really the same pattern (so no reason to double up).

I will record this as two losses, and their small size will show up in the expectancy result.
Attached Image(s) (click to enlarge)
Click to Enlarge Name: usdchf_buy_201001110945.gif Size: 24 KB
Click to Enlarge Name: usdchf_buy_201001111230.gif Size: 20 KB
Hindsight is 20/20
  • #849
  • Edited 11:38am Jan 11, 2010 11:27am | Edited 11:38am
I hate it when this happens (trades at 1745 and 1800). Would have lost about a quarter position.
Attached Image (click to enlarge)
Click to Enlarge Name: usdchf_buy_201001111745.gif Size: 26 KB
Hindsight is 20/20
  • #850
  • Jan 11, 2010 12:29pm Jan 11, 2010 12:29pm
For some reason I stayed out of everything this am. Nothing caught my eye
  • #851
  • Jan 11, 2010 12:58pm Jan 11, 2010 12:58pm
Quoting dryclean
For some reason I stayed out of everything this am. Nothing caught my eye
Well I'm trying to be as mechanical as possible within my hours of operation (0600-1800 GMT), and as far as I know those were valid trades (besides the "wiggles" for some people).
Hindsight is 20/20
  • #852
  • Jan 12, 2010 9:53am Jan 12, 2010 9:53am
Pair of E/U trades offset for a loss of ~1/3 a position, and a U/C sell for a win.

The triple bottom on the 30m E/U MA is hard to ignore, especially with the U/C being divergent at the same time.
Attached Image(s) (click to enlarge)
Click to Enlarge Name: eurusd_buy_201001121030.gif Size: 26 KB
Click to Enlarge Name: eurusd_sell_201001121400.gif Size: 25 KB
Click to Enlarge Name: usdchf_sell_201001121230.gif Size: 23 KB
Hindsight is 20/20
  • #853
  • Jan 12, 2010 4:46pm Jan 12, 2010 4:46pm
Quoting cosgrove
Pair of E/U trades offset for a loss of ~1/3 a position, and a U/C sell for a win.

The triple bottom on the 30m E/U MA is hard to ignore, especially with the U/C being divergent at the same time.
Just to confirm
Pic 1
Buyl E/U it didn't make new low
Pic 2
Sell E/U it didn't make new high
Pic 3
Sell U/C didn't make new high

Correct?
  • #854
  • Jan 12, 2010 6:17pm Jan 12, 2010 6:17pm
U/C didn't make new low buy at 1.01900 let's see what happens
Attached Image (click to enlarge)
Click to Enlarge Name: untitled.GIF Size: 64 KB
  • #855
  • Jan 13, 2010 6:03am Jan 13, 2010 6:03am
http://www.mataf.net/en/tools/correlation

Website has changed 5 min and weekly added and some realtime graphics
much better and very nice
  • #856
  • Jan 13, 2010 8:37am Jan 13, 2010 8:37am
Quoting dryclean
Pic 1
Buyl E/U it didn't make new low
We are buying E/U because it made a higher low while U/C made a lower low. The E/U is showing strength, so we buy it.
Pic 2
Sell E/U it didn't make new high
This is more correct, but I would say "E/U made a lower high, while U/C made a higher high. This shows weakness in E/U, so we sell it."
Pic 3
Sell U/C didn't make new high
Same as pic 2, just swap the pairs.
my comments/corrections in red
Hindsight is 20/20
  • #857
  • Jan 13, 2010 8:48am Jan 13, 2010 8:48am
Quoting dryclean
U/C didn't make new low buy at 1.01900 let's see what happens
Do what you like, but I would advise against trading in the "off hours" with low volume/"signal-to-noise". Also, you don't have matching peaks/valleys in that chart, which is one criteria that I think most people in the thread are concentrating on.
Hindsight is 20/20
  • #858
  • Jan 13, 2010 8:56am Jan 13, 2010 8:56am
Quoting cosgrove
my comments/corrections in red

thanks cosgrove very very helpful

even though I've been off I've been pretty successful with this style

that last trade made a few pips but I understand what you are saying
what time do you suggest trading GMT time please unless you are in EST NY NY
Once again thanks for your help
  • #859
  • Edited 9:23am Jan 13, 2010 9:01am | Edited 9:23am
Quoting dryclean
thanks cosgrove very very helpful

even though I've been off I've been pretty successful with this style

that last trade made a few pips but I understand what you are saying
what time do you suggest trading GMT time please unless you are in EST NY NY
Once again thanks for your help
I don't mean to be rude, but I've posted my trading hours numerous times in this thread and once very recently.

edit: not saying they're the best or anything, though.
Hindsight is 20/20
  • #860
  • Jan 13, 2010 9:08am Jan 13, 2010 9:08am
Well I'm trying to be as mechanical as possible within my hours of operation (0600-1800 GMT), and as far as I know those were valid trades (besides the "wiggles" for some people
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