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High reliable divergence methodology of trading

  • #61
  • Jun 3, 2010 1:48pm Jun 3, 2010 1:48pm
Thanks diavolul, I re-entered today at 10,190 and im about 50 pips in profit, but im a bit scared because it looks like a bearish divergence on the daily chart.
Have a look, do you think I should take my profit and wait to go short?

Cheers.
Attached Image (click to enlarge)
Click to Enlarge Name: Wall Street Daily (03-JUN-10).png Size: 11 KB
  • #62
  • Jun 3, 2010 2:36pm Jun 3, 2010 2:36pm
Quoting baksonlee
Thanks diavolul, I re-entered today at 10,190 and im about 50 pips in profit, but im a bit scared because it looks like a bearish divergence on the daily chart.
Have a look, do you think I should take my profit and wait to go short?

Cheers.
Yes, it is very likely that your long transaction to go waisted, it is a certain down-trend in your image. That's why, you should watch for bearish divergences instead. You could take your profit and wait for bear confirmations. Good look.
  • #63
  • Edited 1:11am Jun 4, 2010 1:04am | Edited 1:11am
Even the price has loosen it's momentum I wanted to present you anyway to see how the possible supports and resistances would be drawn. Notice that this transaction, for those who entered on it it's consumed and would been closed at +1 pip, because of the reject from the 2nd MZ.

Attached Image (click to enlarge)
Click to Enlarge Name: eurusd_30m.PNG Size: 37 KB
  • #64
  • Jun 4, 2010 3:21am Jun 4, 2010 3:21am
I've been asked how do I draw the management zones (noted 1stMZ, etc.). I took it as example the daily chart from GBP/JPY, which it is more convincing.
If you are not sure about the validity of the draw support or resistance by eye visualizing, you can make an average of the values of the representative candlesticks (example from the photo: [129.10 + 129.04 + 129.31 + 129.33 + 129.34]/ 5 = 129.224, rounded is 122.22) and you have the value on that management zone.

Bellow I have been doing the same, for more accuracy. You can do that on 1h or 30m, because you will be in a rush sometimes, but on 4h, daily or weekly you have plenty of time.

Attached Image (click to enlarge)
Click to Enlarge Name: gbpjpy_d.PNG Size: 36 KB
  • #65
  • Jun 4, 2010 9:23am Jun 4, 2010 9:23am
Are these valid shorting opportunities at the open of the next candle?
Attached Image(s) (click to enlarge)
Click to Enlarge Name: Wall Street Daily (03-JUN-10).png Size: 18 KB
Click to Enlarge Name: FTSE 100 Daily (03-JUN-10).png Size: 17 KB
  • #66
  • Jun 4, 2010 10:59am Jun 4, 2010 10:59am
Quoting baksonlee
Are these valid shorting opportunities at the open of the next candle?
The trend lines will be drawn just a little lower, like I did in the images:

Attached Image (click to enlarge)
Click to Enlarge Name: Wall Street Daily (03-JUN-10).png Size: 39 KB


Attached Image (click to enlarge)
Click to Enlarge Name: FTSE 100 Daily (03-JUN-10).png Size: 39 KB


Nice job, anyway. Don't forget to draw the MZ's. Good luck!
  • #67
  • Jun 5, 2010 3:46am Jun 5, 2010 3:46am
Attached Image (click to enlarge)
Click to Enlarge Name: gbpusd_d.PNG Size: 33 KB


We have a hidden bearish divergence confirmed by the price which broke the trend line which triggers a short entry with these coordinates:

SL: 1.4773

2ndMZ: 1.4432
3rdMZ: 1.4391

1stTP: 1.4266 (1/3 partial profit)
2ndTP: 1.3954 (another 1/3 partial profit)
3rdTP: 1.3456 (another 1/3 partial profit)


(*1stMZ is no longer available because the price is very close to it)
  • #68
  • Jun 6, 2010 12:51pm Jun 6, 2010 12:51pm
Hi guys

Diavolul, nice system! I am interested in divergence trading for few months

Have a question:

Why don't U use MACD instead of OSMA? Maybe is there more advantages about OSMA?

I like MACD better by myself

For example in this case:
MACD is diverging, but OSMA is not
http://img337.imageshack.us/img337/7880/nzdusd.jpg
  • #69
  • Jun 6, 2010 11:01pm Jun 6, 2010 11:01pm
Quoting suirad0
Hi guys

Diavolul, nice system! I am interested in divergence trading for few months

Have a question:

Why don't U use MACD instead of OSMA? Maybe is there more advantages about OSMA?

I like MACD better by myself

For example in this case:
MACD is diverging, but OSMA is not
http://img337.imageshack.us/img337/7880/nzdusd.jpg
I do not use MACD, because MACD it doesn't shows very frequently divergences than OSMA. On your picture, in my opinion is that you have a divergence (hidden one) on OSMA too, but at the boundary. I use to compare peaks watching the Data window and compare the swings, before comparing it visually.

Attached Image (click to enlarge)
Click to Enlarge Name: nzdusd.PNG Size: 370 KB
  • #70
  • Jun 6, 2010 11:18pm Jun 6, 2010 11:18pm
personaly i like the zerolag macd
instead of osma and normal macd
it shows div nicely !
check this out
indi in attachment if you like
i founded it somwhere over the web
Attached Image (click to enlarge)
Click to Enlarge Name: ze.gif Size: 37 KB
Attached File(s)
File Type: ex4 ZeroLag_MACD.ex4   4 KB | 318 downloads
  • #71
  • Jun 8, 2010 1:32am Jun 8, 2010 1:32am
diavolul, could you share the results with us, how long have you been using this system and what is the success rate of the system?
  • #72
  • Jun 8, 2010 3:12am Jun 8, 2010 3:12am
Quoting wild
diavolul, could you share the results with us, how long have you been using this system and what is the success rate of the system?
I am using this system for four months with an average of 75%, the maximum of profitability of the trades achieved is 82%. The average was calculated on the first two months, now I am using multiple trading strategies so the percentages are not very relevant wright now.
  • #73
  • Jun 8, 2010 8:21am Jun 8, 2010 8:21am
Where can I get the osma indicator from? does pro real time have it?
  • #74
  • Jun 8, 2010 12:35pm Jun 8, 2010 12:35pm
Quoting baksonlee
Where can I get the osma indicator from? does pro real time have it?
OSMA it's an abbreviation from Moving Average of Oscillator and you can find it on both demo and real platform on each meta trader retail broker. cheers.
  • #75
  • Jun 10, 2010 2:07am Jun 10, 2010 2:07am
So far, we have no input signals. However, the final could be the 70.7 Fibonacci correction of movement 85.21-80.80. If you invalidate the trend line and does not makes a new high, we can get a short position with following benchmarks on a Hidden Bearish divergence type situation:

Attached Image (click to enlarge)
Click to Enlarge Name: audusd_4h.PNG Size: 38 KB


SL: 0.8397
MZ1: 0.8286
MZ2: 0.8258
MZ3: 0.8229

TP1: 0.8111
TP2: 0.7944
TP3: 0.7675
  • #76
  • Jun 10, 2010 3:52pm Jun 10, 2010 3:52pm
Did not work AUDUSD 4H divergence yes?

Because of AUD job good news.

Diavolul, do You traded this? Do You trade on news like in this case?
  • #77
  • Edited Jun 11, 2010 12:32am Jun 10, 2010 11:35pm | Edited Jun 11, 2010 12:32am
Quoting suirad0
Did not work AUDUSD 4H divergence yes?

Because of AUD job good news.

Diavolul, do You traded this? Do You trade on news like in this case?
Yes, I do trade these divergences cases only when it breaks the trend line. But AUD/USD did not broke the trend line so I have waited for another setups. Cheers.
  • #78
  • Edited 1:20am Jun 11, 2010 1:00am | Edited 1:20am
Attached Image (click to enlarge)
Click to Enlarge Name: gbpjpy_4h.PNG Size: 35 KB


Here it's an example of entry on GBP/JPY, based on this method.
We have meet the conditions (hidden bearish divergence and the invalidation of the trend line) but unfortunately, not all the setups works, as we might want. The price rejected after the breach of the trend line and should be taken the 76 pips of the SL.
  • #79
  • Jun 11, 2010 7:09am Jun 11, 2010 7:09am
I opened a short position based on the presence of the hidden bearish divergence and the invalidation of the trend line with the coordinates from the image below:

Attached Image (click to enlarge)
Click to Enlarge Name: gbpusd_4h.PNG Size: 71 KB
  • #80
  • Jun 11, 2010 8:30am Jun 11, 2010 8:30am
Quoting diavolul
I opened a short position based on the presence of the hidden bearish divergence and the invalidation of the trend line with the coordinates from the image below:

Attachment
The transaction reached number two management zone (1.4591), and such position was brought to a 1 pip profit, first management area was invalid because the candlestick broke the first management zone. Next, the first target price is 1.4498, where profit will partially close as it shows the image below:

Attached Image (click to enlarge)
Click to Enlarge Name: gbpusd_4hBE1.PNG Size: 70 KB
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