Combined Divergence Signals Trading Strategy

Hello!

This thread is about the most advanced and complete trading strategy that has ever been developed on the retail side: Combined Divergence Signals Trading (CDST) Strategy.

What makes that claim from that statement justified?

The fact, that this strategy explains consistently and continuously price movements on intraday charts, forecasts price targets and accounts for all relevant trend reversals and continuations. It works for forex, stocks, ETFs, leveraged ETFs and futures. It works on charts in different time frames, regardless of being mostly tested on 1 and 5 minutes time frames. It is a perfect strategy for day-trading. No existing strategy can achieve such results as this one can do, unless it is based on the same principles.

Please visit hicosoft.com for more details.

In the follow up to my introductory post, I will dispel also some myths which have been repeated for years by many traders and mentors. Those four myths have become obsolete with the proper use of the CDST Strategy and its Toolset.

Myth #1: Markets are driven by emotions, greed and fear.

It is still true if one looks at the markets from a perspective of a trader who has no clue what happens on price charts. Such traders are really full of emotions, greed and fear. I understand it perfectly well. Most of the time their role is to supply money. However, they do not drive markets.
Markets are driven by "big money" players. They plan in advance. They can tell their computers, where is the current price target and how to approach it. Programmed with sophisticated algorithms, computers can do that job much better than any human will ever do.

Myth #2: Divergence trading does not work.

It is still true when using a single or even two technical indicators to discover divergence, also when a trader ignores resistance and support trend lines (chart patterns!), or naively believes that from a fact that a regular divergence appeared on a chart, a price reversal must happen. It may happen, but few more conditions must be met. Those conditions are specified by the CDST Strategy, while the CDST Toolset was invented to help discovering them.

Another reason why divergence may not work is a use of cheap data feed. Recently I analyzed a forex chart using data feed X, I refreshed a chart as usual but I could not account for a negative hidden divergence price target. The price approached the target within 12% trade size distance, made a reversal and went up and away... I strongly believed it would return and achieve that target. No way... I was about to throw in the towel!
Then I looked carefully on that chart and noticed some strange gaps. I switched to a data feed Y, refreshed the new chart and calculated the price target again. With trade size of 65 pips the price arrived within 1-2 pips of the new target. It was better than the benchmark for the CDST System.

To help you to figure out whether divergence works or not (if videos on my web site do not convince you enough) I have prepared this piece:
Blue A and B are positive regular divergence signal lines (PRD study)
Pink A and B are their respective price targets (RD_TT tool)
Orange C and D are negative regular divergence signal lines (NRD study)
Green C and D are their respective price targets (RD_TT tool)
Blue E and F positive hidden divergence signal lines (HD study or HD_Shape tool)
Grey E and F their respective price targets (LONG_Targ tool)
The chart does not show indicators, as well as formations resistance or support, target reference and trigger lines.





Myth #3: Trading forex is different than other instruments
From the CDST Strategy perspective there is no difference in trading forex or any other financial instrument. However, as forex is running around the clock, charts are sometimes lengthy including periods of low volatility. For that reason it is reasonable to switch to longer intervals. See the example above.

Myth #4: 1 and 5 minutes charts are too noisy
It is still correct if someone has no idea what that noise is about. That noise might mean a short throwback after pulling a trade trigger, which gives a better entry point, or another short reversal to establish a hidden divergence context to confirm price target and indicate possible swing point, just to mention two only. If a price is breaking through a resistance or support the purpose of that noise is also to place some on the wrong side of the market. That noise is necessary, otherwise the price movement would be too predictable. However, if you have the right strategy and tools that noise can help you a lot.


Thank you for visiting my thread and wish you the best.

hi nice thread , i hope you continued this thread .

Thank you for your kind words and the encouragement. I am just deliberating what to do next and how I could continue this thread.
Starting it, I assumed there might be some interest in divergence trading - that considered to be the most profitable -- but it seemed like the trading society was scared to death by some folks, who few years ago announced that divergence trading did not work. I fully agreed with them: up to now there were no tools to take the full advantage of divergence trading.

On the other hand, my solution that has filled that gap is not a trivial one. It is a result of 7-8 years of research and development effort. It is not trivial because of my point of view, but because of complex nature of the problem domain.

Charts are just visual presentations of price movements. Regardless how chaotic those price movement might be, they contain some encoded info: decisions regarding price targets, trend reversals and continuations. My strategy and tools have been invented to help a trader to decode that info explicitly. No secret indicators, everything is given on a plate. So far I have not heard about a product designated to do the same.

I have invested in this project and expect a return. This return might appear in two ways: by selling the solution to others and continuing to work hard for their success, otherwise, in case of lack of sufficient interest, starting to trade myself.

As far as the continuation of this thread is concerned, I can see a strong need to start awareness of some "miracle indicators", and based upon them "miracle" entry points which opens doors to "fantastic" trades. Sometimes it sounds like a joke when figuring out what really happened on that specific chart, where such a "fantastic" trade occurred. I read stories how people were lured into such traps, paying upfront hefty fees, losing money, while learning nothing, as nobody can learn anything when dealing with secret and miraculous indicators.

Wish you all the best!