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High reliable divergence methodology of trading

  • #81
  • Jun 11, 2010 8:46am Jun 11, 2010 8:46am
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

I would not have taken that trade for a couple of reasons.

1. It is against the overall trend.

2. You had to go too far back to find divergence.

I'm not trying to tell you how to trade your own system. I'm just throwing out something you might want to address for discussion.


I've been playing with this method since you posted it and have done really well.
I've found that most of my trades are on the 30M chart.
I've only had one full stop out and about 10 winners.
It isn't as good as it sounds because most of the winners were +1 pip, bit it is overall profitable.

I only take hidden divergence, but I have observed that regular divergences do almost as well as hidden. At least they appear to.

Thanks for a great method.
  • #82
  • Jun 11, 2010 8:59am Jun 11, 2010 8:59am
Quoting billbss
I would not have taken that trade for a couple of reasons.

1. It is against the overall trend.

2. You had to go too far back to find divergence.

I'm not trying to tell you how to trade your own system. I'm just throwing out something you might want to address for discussion.


I've been playing with this method since you posted it and have done really well.
I've found that most of my trades are on the 30M chart.
I've only had one full stop out and about 10 winners.
It isn't as good as it sounds because most of the winners were +1...
I'm happy I could help someone on here with my method of trading. About the deal, wanted to remind you that this pair has dropped more than 200 pips the top, I think that's pretty conclusive, without watching anything. It is true that situations are sometimes strange and suspicious entries that are not seem to have any chance of development although they develop later. If you have doubts about how much you have to look to past situations put statistics and see the results. Until then, you can not say that it is too distant or too close. Has any meaning, what I am saying?

Thanks for sharing you opinion with me, I appreciate.
  • #83
  • Jun 11, 2010 9:23am Jun 11, 2010 9:23am
Quoting diavolul
If you have doubts about how much you have to look to past situations put statistics and see the results. Until then, you can not say that it is too distant or too close. Has any meaning, what I am saying?
Thanks for sharing you opinion with me, I appreciate.
Yes, i understand and agree.

Here is one I will trade if the trendline is violated and the divergence still exists.
These are the kind I've been looking for- simple and unmistakable.
Attached Image (click to enlarge)
Click to Enlarge Name: gu1.gif Size: 20 KB
  • #84
  • Jun 11, 2010 9:38am Jun 11, 2010 9:38am
Quoting billbss
Yes, i understand and agree.

Here is one I will trade if the trendline is violated and the divergence still exists.
These are the kind I've been looking for- simple and unmistakable.
Usually, I do not take counter trend trades, much less as we are on the New York session on a less than 4h time frame chart. Even assuming that we are still on the bull correction, the bull hidden divergence should be on place in the beginning of the end of Asian or European session to consider it. But she, even so, the deal could work, but chances of going to the 61.8 Fibonacci Expansion is quite small. You forgot to trace the areas of management, are very important, you do not forget it.

Good luck in trading.
  • #85
  • Jun 11, 2010 12:05pm Jun 11, 2010 12:05pm
Quoting diavolul
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:

Attachment
Transactions hit profit target and I closed a portion of profit when it reached 1.4498. The rest of the lot remains open for profit target number two, from 1.4338, as it shows the image below:

Attached Image (click to enlarge)
Click to Enlarge Name: gbpusd_4hTp1.PNG Size: 72 KB
  • #86
  • Jun 11, 2010 4:03pm Jun 11, 2010 4:03pm
Took this trade today using this system and glad to say i was able to make 140 pips profit, not minding that i entered late.
see attachment below

A big thank you for sharing the system
Attached Image (click to enlarge)
Click to Enlarge Name: gbpusd h1.gif Size: 83 KB
  • #87
  • Edited Jun 12, 2010 8:35am Jun 11, 2010 11:54pm | Edited Jun 12, 2010 8:35am
Quoting kester
Took this trade today using this system and glad to say i was able to make 140 pips profit, not minding that i entered late.
see attachment below

A big thank you for sharing the system
You don't have to thank me. Like I said before, the lot you must use in your situation has to be 10 times lesser than the lot you use in a hidden divergence situation, for a better money management. In a regular bearish divergence setup the supports/resistances must be very tight and realistic also, because you cannot know if that peak/bottom it's the end of the correction or trend. If there is certainty in the market, perhaps we were all rich already and we have not had this discussion. Nice job anyway. Keep me in touch for update in you statement please. I want to know how think evolves.
You can disable those arrows from you chart by modifying the color stochastic.

Have a nice week-end.
  • #88
  • Jun 15, 2010 9:12am Jun 15, 2010 9:12am
A setup which, although I was a little skeptical because of hidden bearish divergence type which was almost invisible, it worked just fine. It was an entry, whose SL was supposed to be moved to +1 pip, but because of one mistake I've made because I closed partial profit too early, I brought it to +4 pips, to recover that loss from the mistake.

Attached Image (click to enlarge)
Click to Enlarge Name: gbpjpy_30m.PNG Size: 76 KB


Later on the remaining lot closed to +4 pip, when the price rejected strongly to up direction.
  • #89
  • Jun 15, 2010 10:47pm Jun 15, 2010 10:47pm
Price made a new maximum (1.2348), climbing up area of 78.6, (1.2329) Fibonacci retrace from down move of 1.2453-1.1875. There is a divergence, bearish hidden, on all three oscillators from the chart. If the price will break the trend line, we go short, with the following characteristics:

Attached Image (click to enlarge)
Click to Enlarge Name: eurusd_d.PNG Size: 34 KB


TP2: 1.1763 (FE 100.0)
TP3: 1.1402 (FE 161.8)
  • #90
  • Jun 16, 2010 2:48pm Jun 16, 2010 2:48pm
Hidden bearish divergence type. Down trend is very likely to resume with the possible correction to be completed on 78.6 Fibonacci retrace from 0.8967-0.8577 move. Breaking the trend line will trigger a short with following features as the below image and text is showing:

Attached Image (click to enlarge)
Click to Enlarge Name: audcad_d.PNG Size: 34 KB


TP2: 0.8504 (FE 100.0)
TP3: 0.8263 (FE 161.8)
  • #91
  • Jun 17, 2010 4:42am Jun 17, 2010 4:42am
never really got to grips with divergence, thanks for the thread.
  • #92
  • Jun 17, 2010 5:55am Jun 17, 2010 5:55am
Quoting qwertymyfx
never really got to grips with divergence, thanks for the thread.
Maybe I will make an expert advisor based on it, but it will be difficult when it comes to management zones. Even so, my knowledge in this area is limited but I try to keep it up, and learn something. I am glad you are ok with this method.
Also, you can post some of your entries and exists to have a discipline, trust me - it helps a lot.
  • #93
  • Jun 17, 2010 2:25pm Jun 17, 2010 2:25pm
GBP/USD, monthly:

Perhaps, among us, there are traders who work on the swing chart time frames, keeping positions longer periods of time, I thought to give some examples.
The same rules are applied to this time frame. But, you are not feeling comfortable with it you can close partial profit on the first valid "management zone". I am thinking that some positions,from hundreds of pips on profit will go on reverse and will undo them and take some infinitesimal profit and that could be very frustrating, I suppose.

Example 1:

Attached Image (click to enlarge)
Click to Enlarge Name: gu_monthly_div.PNG Size: 34 KB


Hidden bearish divergence case, with trend line break-out. The stop would be 757 pips, the distance to first management zone is 384 pips, not a bad risk reward in my opinion: 0.5, which on smaller time frames is very hard or near impossible to achieved. That transaction would take at least 30 points, assuming that will cover with one pip a day the negative swap, even so the profit is tiny.

Example 2:

Attached Image (click to enlarge)
Click to Enlarge Name: gu_monthly_div1.PNG Size: 32 KB


Hidden bearish divergence case, with trend line break-out. The stop loss would be 704, the distance to first management zone is 172 pips, a poor risk reward: 0.24. This transaction would be more profitable, in fact, would be active at this time, over 1300 pips at current price.
Targets would be: 1.2184 (3983 pips), 0.9283 (6889 pips) and 0.4591 (11581 pips).
  • #94
  • Edited 2:13am Jun 19, 2010 2:12am | Edited 2:13am
Orientation:

As you see, the price hit the superior zone of a range, delimited to 0.8920 and the 0.8600 (gray rectangle). Also, the current price it is in a very important zone, a cluster zone, from a Fibonacci perspective. As you might observe later, from the image below, the 0.8946-0.8882 zone (red rectangle), it is a confluence of Fibonacci clusters: 88.6 of 0.8967-0.8577 movement, 50.0 of 0.9204-0.8577 movement and the most important one: 38.2 of 0.9458-0.8577 movement.

Attached Image (click to enlarge)
Click to Enlarge Name: audcad_daily.PNG Size: 28 KB



Logical assumption:

The price could stay few days in this confluence zone and then could try to break the 0.8883 where we have an important support and where will be the first management zone, as we'll see a little later. Any much longer time of delaying from breaking down that area could signify a broad range consolidation and a continuation of the initial corrective up move.

Attached Image (click to enlarge)
Click to Enlarge Name: audcad_daily1.PNG Size: 28 KB



Setup:

Analyzing the graph, we can see hidden, bearish divergence type on the all three oscillators. If it breaks the trend line, we will enter a short transaction, considering MZ's and TP's to make valid decisions. 3rdTP, which is not visible on the chart, is located on 0.8315.

Attached Image (click to enlarge)
Click to Enlarge Name: audcad_dailydiv.PNG Size: 37 KB


Good luck in trading.
  • #95
  • Jul 8, 2010 12:26pm Jul 8, 2010 12:26pm
Fantastic thread thanks for the indicators, posting to subscribe
The greatest force on earth is compound interest.
  • #96
  • Jul 8, 2010 1:54pm Jul 8, 2010 1:54pm
I like your method, thanks for sharing.
Time flies like an arrow; fruit flies like a banana.
  • #97
  • Jul 8, 2010 8:55pm Jul 8, 2010 8:55pm
Guys,
@Bwana and sebastionay,

I expect your setup entries if you are able to post it here, doesn't matter if the entries are not perfect or the setups have a certain degree of error, just post it and I will analyze them with you. Thanks for sharing your thoughts. See ya.
  • #98
  • Jul 12, 2010 7:30pm Jul 12, 2010 7:30pm
hello my brother

i've always thought divergences are beautiful

my personal favorite is the divergence that appears on the macd's lines not sure what that's called

anyways this is a 1H chart of usd/jpy

if momentum turns south and we catch strong momentum downwards i will try to catch the wave

i would enjoy hearing thoughts on this chart
Attached Image (click to enlarge)
Click to Enlarge Name: div.jpg Size: 93 KB
  • #99
  • Edited Jul 13, 2010 7:05am Jul 12, 2010 11:10pm | Edited Jul 13, 2010 7:05am
Quoting frankkn
hello my brother

i've always thought divergences are beautiful

my personal favorite is the divergence that appears on the macd's lines not sure what that's called

anyways this is a 1H chart of usd/jpy

if momentum turns south and we catch strong momentum downwards i will try to catch the wave

i would enjoy hearing thoughts on this chart
This is a classic bearish divergence example. The trend line should be put much closer to the open/lows of the candlesticks in a uptrend and to close/high in a downtrend, because we assume, that in majority of cases like this, will develop a correction and as we already know, the corrections could be lesser than 23.8 Fibonacci, better known as consolidations.
Firstly, I recommend you to search for hidden divergences and only after that you should start looking for classic ones, because it ask for extra care.
Down below you can find a document with all four type of divergence, nice explained. Enjoy it.
Attached File(s)
File Type: pdf divergence.pdf   91 KB | 604 downloads
  • #100
  • Jul 13, 2010 1:32pm Jul 13, 2010 1:32pm
Quoting diavolul
This is a classic bearish divergence example. The trend line should be put much closer to the open/lows of the candlesticks in a uptrend and to close/high in a downtrend, because we assume, that in majority of cases like this, will develop a correction and as we already know, the corrections could be lesser than 23.8 Fibonacci, better known as consolidations.
Firstly, I recommend you to search for hidden divergences and only after that you should start looking for classic ones, because it ask for extra care.
Down below you can find a document with...
what kind of extra care?

what do you think of this bullish PB of the 50%.

there is a hidden divergence correct?

do you change your settings for osma depending on the timeframe?
Attached Image (click to enlarge)
Click to Enlarge Name: div_b.jpg Size: 63 KB
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