Daily Divergent Candles Method

Hi guys,

Seems we have some continuing confusion about timezones (as always happens in any forex thread mentioning timezones) so I went to check my chart to confirm:

Currently each daily candle on the charts posted yesterday consist of the 24 hours between Tokyo open to Tokyo open. Pretty sure this is 0000GMT.

I am unsure if this is an issue of daylight savings or what as the charting package is set to Sydney time, but I am happy to continue using this daily candle construction since not much PA occurs in the hours preceding Tokyo open.

So let's settle the issue right now and try not to revisit it (I will edit post #1):

D1 candle consists of the 24H from 0000GMT.

The broker is a CFD bucket shop called www.igmarkets.com.au.

Hi Sinner,

Glad to see you have started sharing some of your work!

I've attached a chart just to confirm my understanding of this method.

I have attached it for what I believe was the most recent bearish divergence candle on the G/Y pair.

Obviously the inverse is correct for a bullish divergence then if I am correct with this bearish chart.

Looking forward to trying this out mate. Are you trading this on demo still or trading with your hard earned?

Looks to me like a pretty simple and very profitable method. The magic of arbitrary number picking is a classic

Nice work.

@ Sinner, thanks for this system.

Visual backtest looks very good, as far as we have discipline...

I was wondering if any of you with mql knowledge could write a "divergent candle" indicator.

I mean, although the system looks profitable, you must check 6 candles for several pairs at 0000 GMT and, if they signal an entry, calculate SL and lot size. By the time you finnish, the entry price is probably gone...

A few ideas for such indicator:

- Places an arrow above/below a divergent candle (useful for visual backtesting);
- Shows an alert saying something like "Sell GBPJPY price 152.00, SL x, TP (50%) y" (x,y could be price or pips or both).
- "Current balance" and "risk %" variables could be set on a daily basis in the indicator. This would be useful to calculate lot size based on risk. With these inputs, the indicator would calculate the number of units/lot size and show the value as part of the alert.

Again, thank you

And pardon mon français...

L.S.

Hello.

Interesting concept. Can I just check the entry price theory please.

Once the 00:00 GMT candle has completed. The 'next day' you open the trade at the open of the next candle ? So you are effectively waiting for a retrace of the 00:00gmt candle from it's close to its open ?
Or am i missing something obvious ?

Many Thanks

Hello Sinner,

Thanks for sharing.

Just glance though H4 and it appears to be applicable in H4 TF as well.... marvellous!

In Daily TF, the SL is very big and I think for a start I would try in H4.

Thanks again.

Did anyone find out if an indicator can be made for this?

Hi guys,

First up I got a few PMs over the weekend, thanks to those people sending me msgs.

Over the weekend I spent a lot of time researching and reading printouts, because I am looking to modify my trading style overall to the higher TF. I have been specifically looking for something to trade GBP/JPY and GBP/CHF with a high expectancy on the D1.

One of the main systems I was interested in was Bill Williams Chaos Trading style system and so I did a lot of research on this style. During this research I discovered Bill Williams gave a talk with a powerpoint presentation to document something very similar to the method I have entailed in this thread.

There are some differences as to the definition of a divergent candle, and some other differences, which IMO make his system of trading divergent candles far better than mine!

Frankly, I was so impressed by what I saw that I have simply decided to discontinue this thread. Anyone interested in trading the method I have outlined here should read the links I provide below and use that instead for much better results!

First of all if you are not familiar with the BW method of trading I suggest you read it in depth here:
http://www.alpari.co.uk/en/alpari_ac...ill_chaos.html

Those unfamiliar with the method may be quick to dismiss it as another EMA cross system or whatever but I promise you the BW Chaos trading style is purely PA based (even though there are multiple indicators, they are all PA based) and easily one of the best systems I have ever seen. I wish I had discovered it when I first began trading!

After you have thoroughly read and understood the Chaos trading style then you can read this PDF:
http://www.forexfactory.com/attachme...02009%203:48pm

This will outline how to trade divergent candles using the BW overall style (which he calls wiseman candles), how to stack divergent candle trades and how to trade them to the point of breakout.

I must stress, you really should read the first link to gain a thorough understanding of the BW Chaos trading style, then the second link. But once you do you will see why I have made the decision to discontinue this thread.

Enjoy guys.

Hey Sinner..thank you for the updated method! Looks good.....but which MA's are the teeth, the lips and the jaw??Thank you!!

Gee, have you guys never heard of hammers, hanging men, shooting stars and inverted hammers? That's what this method is using.

Sinner

Thanks for pointing out the Williams' trading system on Alpari, what a gem. I will be using this to cross-refer my Ichimoku trades prior to entry.

Cheers,
Chngster

Please can you or anybody else make an indicator
for this system? Thanks

Well, I can make this indicator all right.

That would be great! Thank you..
BTW, anyone caught the AUDUSD and USDCAD today?

http://a.imagehost.org/0285/2-10-09.jpg

What broker are you using? I use ibfx and that bullish candle on usdcad on my chart is 1 pip higher than the previous low. Besides, both of those candles on your charts are too long for me.

Too long for me but anyway! I have a feeling stoploss the size of that candle is gonna be the only way to beat tonights NFP!

Current prospect looking like USD strength by NY close so it might work out fine!

Just remember to take half off at 1:1

Hello sinner. Good to see you back here. By the way, this is a solid strategy and I hope you stick around this thread. Thanks.

I will stick around mate, it is hard for me at the moment without proper internet at home on my computer.

When that comes I will provide daily updates on the 4 majors with signals 5 days a week I promise.

To the person who said about hammer, etc yes there are many names for these candlestick patterns I was not trying to take credit for them: I try to group the ones which can pick tops and bottoms together and ignore continuation or breakout signals from this sytem.

The goal is to stack up free trades at potential bottoms until you hit the jackpot. I thought I already explain this. We are talking about mechanical expectancy trading, not PA trading with this system, thanks for your input though.

I'll be looking forward to it.

Good MAE traders.

E/U give long signal this morning? We should probably wait for Monday gap to be filled so we can get an order at Friday close price. But I will take long here anyway.

Long E/U @ 1.4955
SL @ 1.4475 (Friday low - 5)

No other pairs of the 4 majors give signal. G/U was tempting for me to take long but I avoided it because it was only 4 candles low. I am long G/U TP+50 on a different system.

Hello sinner. Thanks for the tip.