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Daily Divergent Candles Method

  • #81
  • Edited 3:36am Oct 16, 2009 3:23am | Edited 3:36am
Quoting sinner-
I am not sure you understand...
explain then.
On all of these, following rules on page 1, you would have had 2 trades stopped out without manual intervention except for maybe the one marked as 220pips probable. In the USDJPY examples a few pages before, even the ones with + pips with an exact manual exit would have been for less than 1:1.
I backtested with the exact rules, no filters, and only GBPUSD was profitable and that was only since June. We need to add extra things here like trading with trend, etc. to filter out some low probability trades or moving stops to break even after x pips.

http://cdn.forexfactory.com/attachme...1&d=1255365187
  • #82
  • Oct 16, 2009 4:12am Oct 16, 2009 4:12am
In your example you take all buys and no sells, not sure why? Is it only because your daily candles show higher than prev 4 instead of 5? Look at my first post you can clearly see plenty of sells on U/J? I clearly stated the filter is just an arbitrary number, pick a smaller one if it allows you to sell jeez.

How can I explain it any more?

I guess the only thing I really want to add is you have to trade all 4 majors, not just one pair, to keep the equity curve smooth.

For example, I am pretty sure the last call I posted is still going at some +350 pips on a 0 risk trade.
  • #83
  • Edited 5:42am Oct 16, 2009 4:17am | Edited 5:42am
Quoting sinner-
In your example you take all buys and no sells, not sure why? Is it only because your daily candles show higher than prev 4 instead of 5? Look at my first post you can clearly see plenty of sells on U/J? I clearly stated the filter is just an arbitrary number, pick a smaller one if it allows you to sell jeez.

How can I explain it any more?

I guess the only thing I really want to add is you have to trade all 4 majors, not just one pair, to keep the equity curve smooth.

For example, I am pretty sure the last call I posted is still going at some...
Of course and I realise the number is arbitrary but I can't see any sells on there based on previous 5 candles - this is why I was talking about only trading with the trend, etc.
The EA I ran allows me to backtest this and each divergent candle trade was based on 5 previous candles and the results weren't encouraging but adding a few extra filters, it looks promising.

I have attached UDJPY based on 5 previous candles not including the actual traded candle in that count and 0.1 lot trade size - this is the same as the indicator uploaded a few posts before by fewhills.
This is based on:
Quote
Bullish Divergent Candle: Makes a lower low than the previous 5 candles but finishes in the green.
Bearish Divergent Candle: Makes a higher high than the previous 5 candles but finishes in the red.
Do the trades look accurate?

http://www.sidekicker.net/DD/usdjpy.gif

Since Jan (0.1 lot): http://www.sidekicker.net/DD/USDJPY_Year.htm
since June (0.1 lot): http://www.sidekicker.net/DD/USDJPYFromJune.htm
  • #84
  • Edited 9:16am Oct 16, 2009 8:45am | Edited 9:16am
The drawdowns can be quite large.

Here is EU since Jan (profit factor 1.55, slight up gradient but some big drawdowns): http://www.sidekicker.net/DD/EU.htm

http://www.sidekicker.net/DD/eu_jan.gif

Here is GU since Jan (profit factor 1.37, nice and gradual): http://www.sidekicker.net/DD/GU.htm

http://www.sidekicker.net/DD/gu_jan.gif

Here is EG since Jan (profit factor 1.37, flat graph given ups and downs): http://www.sidekicker.net/DD/EG.htm

http://www.sidekicker.net/DD/eg_jan.gif
  • #85
  • Oct 19, 2009 12:46pm Oct 19, 2009 12:46pm
San Miguel,
what is the filter that you mentioned in your post?

for trading divergence candle, maybe we can put Sell stop / buy stop at the low/high of the divergence candle.

the secret of trading candlestick lies on the Money management itself (i think all trading strategy need to use proper MM to be successful)

e.g - open 2 post, close 1 post when hit TP1 (which is equivalent to SL) and move another 1 post to BE+5pips etc.

whenever SL is hit, be cool....(trader must be cool enough to make decision..same goes to any job isnt it?)
  • #86
  • Oct 19, 2009 1:12pm Oct 19, 2009 1:12pm
Quoting bujal38
San Miguel,
what is the filter that you mentioned in your post?

for trading divergence candle, maybe we can put Sell stop / buy stop at the low/high of the divergence candle.

the secret of trading candlestick lies on the Money management itself (i think all trading strategy need to use proper MM to be successful)

e.g - open 2 post, close 1 post when hit TP1 (which is equivalent to SL) and move another 1 post to BE+5pips etc.

whenever SL is hit, be cool....(trader must be cool enough to make decision..same goes to any job isnt it?)
I will backtest this:
e.g - open 2 post, close 1 post when hit TP1 (which is equivalent to SL) and move another 1 post to BE+5pips etc.

Of course there are many options. A few people have mentioned filters. I simply suggested a bollinger band and to only trade divergence candles on the extreme points.

Some others have suggested MAs.

sinner has suggested 4 or 5 previous candles as the count.

The backtests show the profitability but the huge drawdown makes this a scary strategy for all but the very brave. A filter to cut out the big drawdown trades would help.
  • #87
  • Oct 23, 2009 8:13am Oct 23, 2009 8:13am
are you still using this strategy or combine this with Ichi? Will you post your divergence candle live trade in this thread moving forward?
  • #88
  • Jan 17, 2010 9:25am Jan 17, 2010 9:25am
Is the thread dead? Just found out a modification that gave a lot of profit. Manually backtested gj, uj, gu, and gc for the last 4 years. The result from my modification looks promising though not much gains in uj. We can resurect this thread.
  • #89
  • Jan 18, 2010 7:36pm Jan 18, 2010 7:36pm
Hi!

I just read this thread and started testing

I've tested last year. I used simple rules from first post. My EA showed profit only on E/U and G/U. It may be profitable with some filters...

Norahsfx, what filter do you use? Maby I can programe it, and share my code?
  • #90
  • Jan 22, 2010 3:24pm Jan 22, 2010 3:24pm
Quoting ptys777
Hi!

I just read this thread and started testing

I've tested last year. I used simple rules from first post. My EA showed profit only on E/U and G/U. It may be profitable with some filters...

Norahsfx, what filter do you use? Maby I can programe it, and share my code?
Sorry, I am not used to technical words. What do you mean by filters?
  • #91
  • Nov 7, 2011 6:04pm Nov 7, 2011 6:04pm
Hi Sinner, just want to thank you for the nice and simple strategy you put out there. i will deffenately put it into practice as i have backtest it and it proove to be working.
Must it be 5 candle back for the signal, or just wen the finish candle give signal?
Regards.
Eki.
  • #92
  • Dec 10, 2011 1:00pm Dec 10, 2011 1:00pm
Quoting fewhills
I have added a parameter for the distance to the candle. Default is 20 pips for the daily.
The dot appears as soon as the candle changes color. So if you want to be sure you will have to wait until that bar has been closed.
Hi, sir

can you updated this nice indicator to multi time frame? thank you very much in advance.

Thomas C
  • #93
  • Dec 10, 2011 7:51pm Dec 10, 2011 7:51pm
hello dear sinner,thank you so much for your nice strategy that you sharing with
us,as i backtested we can filter a lot of losses with conjunction of TDI indi or
trade dynamic index.
regards
Attached File(s)
File Type: mq4 TDI Red Green.mq4   9 KB | 483 downloads
  • #94
  • Dec 10, 2011 8:51pm Dec 10, 2011 8:51pm
Quoting henryloving
are you still using this strategy or combine this with Ichi? Will you post your divergence candle live trade in this thread moving forward?
Hope this thread would alive.
Just wonder what are the MAs being used?
Anyone knows?
Cheers
  • #95
  • Dec 10, 2011 10:37pm Dec 10, 2011 10:37pm
I can't understand what is the idea ? All that Divergent Candles it is reversal candlestick formations, patterns, hammers, engulfing, dark cloud cover, stars. well it is works, but first of all it is confirmation of S/R. And if you will take a look at lower time frame, H4, H1, at S/R levels you will find reversal candles too, and you can get better entry
  • #96
  • Apr 11, 2013 11:59am Apr 11, 2013 11:59am
Hello is there anyone still using this system ?
  • #97
  • Last Post: Sep 18, 2013 4:06am Sep 18, 2013 4:06am
I have found a way to filter out a few bad trades, and also a take profit method.

Only enter if the bar AFTER the divergent candle closes in the direction that the divergent candle closes.
If not, then the FIRST candle AFTER the divergent candle which closes in that direction.

i.e: If divergent candle is a positive candle, only enter if candle after it also closes positive.
If it closes negative then wait for a positive candle to enter.
So only enter after the FIRST positive candle from the divergent bar.
Opposite for negative divergent entry.
positive = default Green candle, negative = default Red candle.

Take profit use Fib Retracement on High and Low of Divergent Candle, Target 161.8 Fib Retracement.
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