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Pair Divergence Method

  • #541
  • Sep 21, 2009 8:48pm Sep 21, 2009 8:48pm
Quoting billbss
Lucid,
In every case of the missing candle, I have found that there is no gap on the actual chart of the overlayed pair.

Let me try to explain it this way.

If you compare the overlayed USDCHF with an original chart of USDCHF, they will not match.

You will see the shift occurring due to missing bars on the overlay. The bars are not missing on the USDCHF chart.
This makes sense since when you drop the overlay of USDCHF on a USDCHF chart they are both missing that candle, so everything lines up. The problem comes in when EURUSD has that candle, but USDCHF does not. On the 5M chart I have lots of missing candles. I can scroll through my history center and since every other row is gray I can remember that the gray rows end in a 5 for instance. As I click through I can find where all the sudden the gray rows are ending in 0. I can then find the candle which is missing. If you hover over that area on your chart you will see that the candle is missing on the chart too. I have to find a way to compensate for that when dealing with two different pairs, but it's proven quite tricky.

Don't get me wrong, I will solve this, but it's taking longer than I had hoped.

Thanks for your help.
  • #542
  • Sep 21, 2009 8:53pm Sep 21, 2009 8:53pm
In fact, now that I think of it, this is really quite bad functionality by metatrader. It should know better since a missing candle will throw off all period based indicators. If it's true that there were literally zero ticks durring that period then we should get a flat line, not a missing candle. If instead it's just corrupt data from the broker, then I guess metatrader isn't to blame, but it still wreaks havock on period based calculations.
  • #543
  • Sep 21, 2009 8:57pm Sep 21, 2009 8:57pm
Quoting LucidObscuri
In fact, now that I think of it, this is really quite bad functionality by metatrader. It should know better since a missing candle will throw off all period based indicators. If it's true that there were literally zero ticks durring that period then we should get a flat line, not a missing candle. If instead it's just corrupt data from the broker, then I guess metatrader isn't to blame, but it still wreaks havock on period based calculations.
Ah Ha! I think I just got an idea. I'm going to do what metatrader should be doing for me. I'll copy the whole candle array into a new one and everytime I come across a missing candle I'll use the close price of the previous candle to create a flat candle with no wick.

Bingo.

Thanks for helping to salt my brainstorm.
  • #544
  • Sep 21, 2009 9:08pm Sep 21, 2009 9:08pm
Quoting LucidObscuri
Ah Ha! I think I just got an idea. I'm going to do what metatrader should be doing for me. I'll copy the whole candle array into a new one and everytime I come across a missing candle I'll use the close price of the previous candle to create a flat candle with no wick.

Bingo.

Thanks for helping to salt my brainstorm.
That's good thinking, Lucid.
I KNEW you would figure it out...
  • #545
  • Sep 22, 2009 2:45am Sep 22, 2009 2:45am
thanks Billbss for sharing this system. Very interesting indeed! All I've done is added the overlay chart in the below pic. Is this what we're looking for? 1st trade would short the green line (EJ). 2nd trade would have shorted GJ (orange) ?
Attached Image (click to enlarge)
Click to Enlarge Name: ejgj divergence 22sep09.gif Size: 16 KB
  • #546
  • Sep 22, 2009 10:01pm Sep 22, 2009 10:01pm
billbss first of all thank you for sharing your method. I looked at it and back tested it and it really looks great. Here is a screenshot for e/u and g/u pairs. I would like to know if I am at the right track. As you can see that there are divergence between the 2 pairs and looks of it e/u made h/h and g/u didn't so this means that g/u will be shorted here. After carefully looked at the g/u pair the chart showed me other clues as well, you will notice that the price did hit 61.8 fib level, another clue is that it is also hitting a resistance trend line, another one is that a support line that was brocken now it is becoming a res line which all are indicated with black circles. I am still waiting for the price to hit the trend line around 1.6430-6440 area, then it would be a great trade to take. But I just want to know if I have the idea with the divergence method that you have explained here. Thanks
Attached Image (click to enlarge)
Click to Enlarge Name: div01.jpg Size: 122 KB
  • #547
  • Sep 23, 2009 12:41am Sep 23, 2009 12:41am
Iam short on the above example at 6400 with 2 orders, TP1 at 50 pips and TP2 50pips, I also saw other divergence like u/j and e/j and usd/cad and usd/chf, but didn't had as many reasons for an entry as this example does.
  • #548
  • Sep 23, 2009 10:08am Sep 23, 2009 10:08am
I guess I am on the right track since I got my 50 pips. from now on I will only go with one order. Here is another trade that I took u/cad and u/chf, gave me almost double of ATR 14*2 which I had 1-2 risk ratio on that one.
Attached Image (click to enlarge)
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  • #549
  • Sep 23, 2009 10:15am Sep 23, 2009 10:15am
I did backtesting on this system, now the higher the time frame the more pips you can take. For now I only took 50-60 pips but with 1 hour timeframe you could go up to 200-300 pips. Slowly I will adjust to that, or may be enter with 2 orders and close the first order with certain amount of pips and continue with the 2nd order untill 200-300 pips and as you go along you could also move your SL to book the pips. Just a thought, I still have to back test how to handle the TPs SLs and get max out of this great strategy.
  • #550
  • Sep 23, 2009 10:38am Sep 23, 2009 10:38am
Quoting fed
billbss first of all thank you for sharing your method. I looked at it and back tested it and it really looks great. Here is a screenshot for e/u and g/u pairs. I would like to know if I am at the right track. As you can see that there are divergence between the 2 pairs and looks of it e/u made h/h and g/u didn't so this means that g/u will be shorted here. After carefully looked at the g/u pair the chart showed me other clues as well, you will notice that the price did hit 61.8 fib level, another clue is that it is also hitting a resistance...
You've got the right idea.
What you are doing is different than I do.

eu and gu are not correlated enough to use my system.
I have not found any two pairs that are usable, other that eu and uchf.

If you look at the two charts you posted, they do not even look the same. There are only spots that imply any correlation.

Without the two pairs looking almost identical (as eu and uchf do) deviations are meaningless.

Having said that, don't stop what you are doing.
It may be you are on to something much better than this system.
If it is profitable, it is right.
  • #551
  • Sep 23, 2009 11:03am Sep 23, 2009 11:03am
Hello all,

I'll use for the analysis the first graphic in the thread which contains eur/jpy and gbp/jpy.

So, the point is that if eur/jpy makes a new high and gbp/jpy fails to make a new high, then sell gbp/jpy.
The first point, eurjpy makes a new high: this means that euro is stronger, and jpy is weaker and weaker.
On the other hand, gbpjpy fails on making a new high: this means that yen is not so weak vs gbp. Or, looking it in a different way, gbp has become weaker. Therefore it seems reasonable that gbpjpy will fall a bit more.

Nothing new so far. Now, what about the third leg of this table? eur/gbp. I have not seen the graphics yet, but as soon as i get home I'll do. What I would expect to see is eur/gbp falling more pips than gbp/jpy. Am I right? In a few hours I'll know.

Nice trading.
  • #552
  • Edited 6:49pm Sep 23, 2009 6:17pm | Edited 6:49pm
Quoting billbss
You've got the right idea.
What you are doing is different than I do.

eu and gu are not correlated enough to use my system.
I have not found any two pairs that are usable, other that eu and uchf.

If you look at the two charts you posted, they do not even look the same. There are only spots that imply any correlation.

Without the two pairs looking almost identical (as eu and uchf do) deviations are meaningless.

Having said that, don't stop what you are doing.
It may be you are on to something much better than this system.
If it is profitable,...
hi, thanks for your reply, I shorted the g/u again today after it went up north after my first trade, it gave me another 87 pips. so far what I am doing it working fine. But I willalso try e/u and u/chf pairs as well.... so this made 3 in a row... I will post a screenshot tonight for that trade.

Before I was trading with the 2-5 breakout strategy and it was a good strategy but the timing was not great for me, this is a great strategy. I will post daily with my trades as long as it works
  • #553
  • Sep 23, 2009 6:46pm Sep 23, 2009 6:46pm
Quoting gonso
Hello all,

I'll use for the analysis the first graphic in the thread which contains eur/jpy and gbp/jpy.

So, the point is that if eur/jpy makes a new high and gbp/jpy fails to make a new high, then sell gbp/jpy.
The first point, eurjpy makes a new high: this means that euro is stronger, and jpy is weaker and weaker.
On the other hand, gbpjpy fails on making a new high: this means that yen is not so weak vs gbp. Or, looking it in a different way, gbp has become weaker. Therefore it seems reasonable that gbpjpy will fall a bit more.

Nothing...
You are right in your analysis.
  • #554
  • Sep 23, 2009 7:27pm Sep 23, 2009 7:27pm
billbss I forgot to mention that the e/u and g/u pairs I figured out that both pairs will usually go to the same direction and one makes the h/h and the other doesn't then when both pairs make their way to the same direction then take the trade, I don't know if that makes any sence or not. I did the back testing on both pairs and analysed it and I am confi enough to take the trades live now with smaller lots for now, but eventually will increase the lots as I go long with it.
  • #555
  • Sep 23, 2009 7:34pm Sep 23, 2009 7:34pm
Quoting fed
billbss I forgot to mention that the e/u and g/u pairs I figured out that both pairs will usually go to the same direction and one makes the h/h and the other doesn't then when both pairs make their way to the same direction then take the trade, I don't know if that makes any sence or not. I did the back testing on both pairs and analysed it and I am confi enough to take the trades live now with smaller lots for now, but eventually will increase the lots as I go long with it.
Okay. If it works- go for it.
  • #556
  • Sep 24, 2009 8:23am Sep 24, 2009 8:23am
Euro buy early this morning, easily hit 2x ATR profit level. There's been a bit of a drought for these trades lately, but that's fine by me as long as it's still profitable
Attached Image (click to enlarge)
Click to Enlarge Name: eurusd_buy_200909240730.gif Size: 19 KB
Hindsight is 20/20
  • #557
  • Sep 24, 2009 10:06am Sep 24, 2009 10:06am
Quoting Trumpcard
thanks Billbss for sharing this system. Very interesting indeed! All I've done is added the overlay chart in the below pic. Is this what we're looking for? 1st trade would short the green line (EJ). 2nd trade would have shorted GJ (orange) ?
hi, I also downloaded the overlay indi which is called the overlaychart.mg4 and I have changed it to ex4 and applyed it to my chart but nothing shows... do you know what I need to do for it to show? thanks
  • #558
  • Sep 24, 2009 10:51am Sep 24, 2009 10:51am
Here is another one that I got this morning around 9am. I got the 100 pips and I am out. The rally is still going, because it was with 15min I exited earlier. This makes it 5 in a row, hopefully it will continue....
Attached Image (click to enlarge)
Click to Enlarge Name: div03.jpg Size: 116 KB
  • #559
  • Sep 25, 2009 9:33am Sep 25, 2009 9:33am
Euro buy on the 1hr. 58 pip TP/SL.

Edit for clarity: I'm talking about the one at 1500 hours on the 25th.
Attached Image (click to enlarge)
Click to Enlarge Name: eurusd_buy_200909251500.gif Size: 21 KB
Hindsight is 20/20
  • #560
  • Sep 26, 2009 10:20am Sep 26, 2009 10:20am
Quoting cosgrove
Euro buy on the 1hr. 58 pip TP/SL.

Edit for clarity: I'm talking about the one at 1500 hours on the 25th.
many waves between your trade. I believe it is a no-trade for billbs.
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