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Pair Divergence Method

  • #181
  • Apr 14, 2009 8:03am Apr 14, 2009 8:03am
Quoting MyxoMop
Works on both pairs in the same time.
Here is EY 4H. GY much better.
MyxoMop, did you do the tests with Bill's original exit and SL rules based on ATR?
One Chart is Worth Ten Thousand Words.
  • #182
  • Apr 14, 2009 8:21am Apr 14, 2009 8:21am
Went short on the USDCHF, (reverse the long) on the first vertical line. Then closed it when EURUSD went short on second vertical line.

First was a few pips profit and second was successful at 2 x atr

Bill, Am I supposed to close the existing trade if another opposite trade presents it self? I think it would be counter productive to have opposite trades running.
Attached Image
  • #183
  • Apr 14, 2009 8:39am Apr 14, 2009 8:39am
Quoting smjones
Went short on the USDCHF, (reverse the long) on the first vertical line. Then closed it when EURUSD went short on second vertical line.

First was a few pips profit and second was successful at 2 x atr

Bill, Am I supposed to close the existing trade if another opposite trade presents it self? I think it would be counter productive to have opposite trades running.
Yeah, I'd close on a counter trade.
Although in this case, the first U/C short is still alive and looks like it may go on to make profit, I think that's rare.
  • #184
  • Edited 9:43am Apr 14, 2009 9:27am | Edited 9:43am
Quoting billbss
If you haven't placed a MA on your chart then the green line is a line graph of the Close.

Place a Simple MA- 1 period, Typical Price on the chart.
It will look almost like the green line does now, with very small differences.

Then -right click the chart- Properties- Colors.
Change the "Line Graph" color to "None".

That will leave the MA.

thanks Billbss for explanation!
is the default red line in the Indicator, for the second pair, a moving average or price? (I know you did not write the code)

on today's EURJPY and GBPJPY 15m IBFX around between 9:45 and 12:00 chart time....would you say the peaks and valleys do not line up for a EURJPY Short trade? or is it close enough for a valid set up?
  • #185
  • Apr 14, 2009 9:30am Apr 14, 2009 9:30am
Hi Bill

Hanover has just posted this:
http://www.forexfactory.com/showthread.php?t=163158

The Recent Strength indicator plots the relative strengths of each currency against each other, on any timeframe(s) that you choose.

I think it would be useful for your Pair Divergence Method..

Hope this helps

C
Boxing clever since 76.
  • #186
  • Apr 14, 2009 9:30am Apr 14, 2009 9:30am
Quoting MyxoMop
Works on both pairs in the same time.
Here is EY 4H. GY much better.

Hello MyxoMop,

did you write an Expert Advisor for Billbss's system to produce the backtest?
  • #187
  • Edited 11:05am Apr 14, 2009 9:47am | Edited 11:05am
Quoting LongPath
thanks Billbss for explanation!
is the default red line in the Indicator, for the second pair, a moving average or price? (I know you did not write the code)

on today's EURJPY and GBPJPY 15m IBFX around between 9:45 and 12:00 chart time....would you say the peaks and valleys do not line up for a EURJPY Short trade? or is it close enough for a valid set up?
It's an average.

On my chart, they didn't line up enough for a trade.

A good rule of thumb is- if you're in doubt, don't trade it. The ones we're looking for will be clear and unmistakable.


Also, if you see what is a near trade, but it doesn't perfectly line up- go to a higher time frame. You may have it there, too. It may be clean.
  • #188
  • Apr 14, 2009 12:14pm Apr 14, 2009 12:14pm
Here's the first loss, I've seen in a while.
Long on EUR/JPY- Hit the SL.
Attached Image (click to enlarge)
Click to Enlarge Name: egdiv4.gif Size: 40 KB
  • #189
  • Apr 14, 2009 12:16pm Apr 14, 2009 12:16pm
Quoting smjones
Bill, Am I supposed to close the existing trade if another opposite trade presents it self? I think it would be counter productive to have opposite trades running.
As with any method, trading in a context of the current trend helps (A LOT). Hence, if you are trading M15, taking just those trades which are in line with H1 trend would improve results. Unless the market is ranging, of course...
One Chart is Worth Ten Thousand Words.
  • #190
  • Apr 14, 2009 12:20pm Apr 14, 2009 12:20pm
Quoting billbss
Here's the first loss, I've seen in a while.
Long on EUR/JPY- Hit the SL.
Bill, it could be a good idea to keep an eye on the price itself too (as well a couple of MAs). As I mentioned above, taking just the trades with the current trend (H1 if you are trading M15) as well as avoiding (or being aware of) consolidation periods could help avoid bad trades (but not eliminate 100%).
Attached Image
One Chart is Worth Ten Thousand Words.
  • #191
  • Apr 14, 2009 12:21pm Apr 14, 2009 12:21pm
Quoting Forex007
As with any method, trading in a context of the current trend helps (A LOT). Hence, if you are trading M15, taking just those trades which are in line with H1 trend would improve results. Unless the market is ranging, of course...
Have you tested taking only trades in line with the H1 trend?
What were your results?

How do you identify the H1 trend?
  • #192
  • Apr 14, 2009 12:27pm Apr 14, 2009 12:27pm
Quoting Forex007
Bill, it could be a good idea to keep an eye on the price itself too (as well a couple of MAs). As I mentioned above, taking just the trades with the current trend (H1 if you are trading M15) as well as avoiding (or being aware of) consolidation periods could help avoid bad trades (but not eliminate 100%).
I appreciate your suggestion, but I can't agree.
It has been my experience that the more filters and indicators used, the weaker the system becomes until it ceases to exist.

This is hitting around 80%. I have not done a thoroughly documented backtest, but I'ts my observation that it's very close to 80- maybe more.

I think this is a case of - if it ain't broke, don't fix it.
  • #193
  • Edited 1:01pm Apr 14, 2009 12:48pm | Edited 1:01pm
Quoting billbss
I appreciate your suggestion, but I can't agree.
It has been my experience that the more filters and indicators used, the weaker the system becomes until it ceases to exist.

This is hitting around 80%. I have not done a thoroughly documented backtest, but I'ts my observation that it's very close to 80- maybe more.

I think this is a case of - if it ain't broke, don't fix it.
Sorry, Bill, I should have been more clear.

Your method - in my view - is very good for identifying a "brewing" momentum (somewhat like a spring/coil being squeezed) as well as the direction of that new momentum.

Price (candlesticks and their patterns) helps me to fine-tune the entry point, on a lower TF. E.g. if I see divergence on H1, zooming into M15 help me to pinpoint where I open a position.

MAs help me to see the underlying/current trend. I use MAs in two ways: (a) price above/below SMA50; and (b) relationship between MAs 13, 21 and 62 (you can use any similar fast, medium and slow MAs).

I am not trying to change or improve your system; simply a thought how else it can be used.
One Chart is Worth Ten Thousand Words.
  • #194
  • Apr 14, 2009 3:45pm Apr 14, 2009 3:45pm
We had two more trades on the EUR/USD - USD/CHF.
Both were shorts on EUR/USD.
The are still active and in profit, so far.
Attached Image (click to enlarge)
Click to Enlarge Name: ecdiv.gif Size: 44 KB
  • #195
  • Apr 14, 2009 5:27pm Apr 14, 2009 5:27pm
Hello there Mr.Bill Sir,

Firstly, congratulations on the method and thankyou for sharing, looks like it is on to something.

Secondly, my word it took me a while to get that chart overlay indicator working ! lol

I will be forward testing this on demo and I will report any insights etc I have.

Thirdly, Am I doing it right ? (See chart)

And lastly, why did you enter where you did on the EURUSD trade ? You deem to be leaving it a while after the set up occurs to enter, any particular reason ?

EDIT - Attached chart.

Regards,
Jig
Attached Image (click to enlarge)
Click to Enlarge Name: DIV Method.jpg Size: 244 KB
  • #196
  • Apr 14, 2009 5:50pm Apr 14, 2009 5:50pm
Quoting billbss
We had two more trades on the EUR/USD - USD/CHF.
Both were shorts on EUR/USD.
The are still active and in profit, so far.
Bill, I saw these also. Thanks for a great idea. I am getting the hang of it now. these both were successfull
Attached Image
  • #197
  • Apr 14, 2009 6:59pm Apr 14, 2009 6:59pm
Quoting Jigsaw
Hello there Mr.Bill Sir,

Firstly, congratulations on the method and thankyou for sharing, looks like it is on to something.

Secondly, my word it took me a while to get that chart overlay indicator working ! lol

I will be forward testing this on demo and I will report any insights etc I have.

Thirdly, Am I doing it right ? (See chart)

And lastly, why did you enter where you did on the EURUSD trade ? You deem to be leaving it a while after the set up occurs to enter, any particular reason ?

EDIT - Attached chart.

Regards,
Jig
You're doing it right, according to the chart you posted.

The red vertical lines on my chart showed the entrances.

They were at the point where both pairs turned down.

If they had been longs, the entrance would have been at the point when both pairs turned up.
  • #198
  • Apr 14, 2009 7:08pm Apr 14, 2009 7:08pm
Quoting smjones
Bill, I saw these also. Thanks for a great idea. I am getting the hang of it now. these both were successfull
Your welcome.
I hope you make a bunch of pips with it.
  • #199
  • Apr 14, 2009 8:30pm Apr 14, 2009 8:30pm
Quoting billbss
There is an MT4 indicator named "Average True Range".
It computes the heights (ranges) of the bars (H minus L) and averages them.
An ATR 14, is the average range of the last 14 bars.
When you enter a trade, look at the current ATR 14.
Double it and use that number for your SL and TP.
So if my current price that i want to enter is difference from the atr 14 by 30 pips apart. I double it to 60 pips apart. is that the meaning of 2 x atr 14
  • #200
  • Apr 14, 2009 8:40pm Apr 14, 2009 8:40pm
Quoting jinsen
So if my current price that i want to enter is difference from the atr 14 by 30 pips apart. I double it to 60 pips apart. is that the meaning of 2 x atr 14
No. There is no relationship between price and ATR.

At the time you enter, check the ATR 14. It shows the average range (H-L) of the last 14 bars.

Double it. That is your SL and TP.

The overlay indicator, prints the 2 x ATRs for both pairs in the bottom right of the chart.
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