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  • #3,881
  • Apr 24, 2011 5:30am Apr 24, 2011 5:30am
Hi PipRiderFX and Happy Easter

You mention videos on this system where could i view these.

many thanks
  • #3,882
  • Apr 24, 2011 6:03am Apr 24, 2011 6:03am
Quote
In the pdf guide it is mentioned that the setup candle should cross the SMA? Well I have seen a few examples in the posts and also the videos where the setup candle does not cross the SMA at all so for example if you are going long the Setup candles is already above the SMA.

Is it correct in saying that ultimately the criteria is for a close above the SMA (for Longs) after a pull back along with a CCI above 50 (in a simplistic form)

Well in your example about the long if the bar is already above the sma only becomes a setup bar if it´s low is within 2.4 pips of the sma and cci above 50... Hope i made it clear for you

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Regards
  • #3,883
  • Apr 24, 2011 8:40am Apr 24, 2011 8:40am
Quoting PipRiderFX
Hi All and Happy Easter!

I have a quick question...

In the pdf guide it is mentioned that the setup candle should cross the SMA? Well I have seen a few examples in the posts and also the videos where the setup candle does not cross the SMA at all so for example if you are going long the Setup candles is already above the SMA.

Is it correct in saying that ultimately the criteria is for a close above the SMA (for Longs) after a pull back along with a CCI above 50 (in a simplistic form)

Thanks
I wrote the PDF and the way it is written is in accordance with the pure rules from Divergence. In other words, the pure rules are that the pullback goes to the sma, crosses it and then the setup bar crosses it in the correct direction and is within 2.4 pips of the sma.

There are some that have taken trades where the bars never truly "cross" the sma but the wick or a portion of the candle touch the sma. These trades have worked out and seem to be valid. Although, as mentioned, the pure rules according to Divergence is that the setup bar crosses the sma or is within 2.4 pips of it.

Hope that helps.
  • #3,884
  • Apr 24, 2011 9:11am Apr 24, 2011 9:11am
I am really trying to get to grips with this stuff and just want to make sure I am reading the situation properly.


In the chart below The market had been moving up so initially I would have been looking for a long entry. But then during the US session the previous high was broken which changed my bias from long to short. Price then pulled back to this area and gave a long entry signal. However because of the previous move down I wasn’t in the market for a long and hence passed up on it. A few candles later I get the short and enter the trade.


This trade was on the 7th of March during the US session.


@Divergence is this how you would have handled this trade?
Thank you
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  • #3,885
  • Apr 24, 2011 9:13am Apr 24, 2011 9:13am
Hi,

Ok I understand what you are saying. The only reason I asked it that on the videos by Divergence he gives some examples where there is no cross back and forth through the SMA.

But thank you for clarifying.
  • #3,886
  • Apr 24, 2011 9:17am Apr 24, 2011 9:17am
Quoting PipRiderFX
I am really trying to get to grips with this stuff and just want to make sure I am reading the situation properly....
Remember, in a long market the trend is still up until the Higher LOW has been broken not the previous Higher High. So in this case it looks like you would have had a countertrend trade until the HL was broken. This is the way it is described in this thread and on the videos by Divergence. It certainly looks like a valid short signal but from a countertrend trade mentality. The area you would have wanted to look long would have been when it may have bounced off the previous HL area and continued up. Possibly a Div/123 setup at that point. The time to think short is when it would have gone through the HL, pullback, bounced on the new resistance and then gone down.

Sometimes the previous HL or LH can be a fairly large distance from the current bars. So until it breaks those areas you will be countertrend trading if you take the opposite from the overall trend.
  • #3,887
  • Edited 9:40am Apr 24, 2011 9:23am | Edited 9:40am
Quoting PipRiderFX
Hi,

Ok I understand what you are saying. The only reason I asked it that on the videos by Divergence he gives some examples where there is no cross back and forth through the SMA.

But thank you for clarifying.
That is 100% true. Div does cover some of those type of trades. From watching others and learning if you take the pure setups where they cross the sma and give all the signals your probability goes up. That is not to say that there are not valid trades without fully crossing. I personally have not seen anyone taking a trade that the bars did not at least touch the sma to some degree. Touching, yes, but not even touching or crossing, not so much. I believe Div even discusses this on one of the videos to a small degree and says he would not trade it if it did not even touch it and just stayed above. To be honest, I haven't seen that many where it did not at least touch the sma. Generally when it does not touch it is when it is in a very strong move up or down, very quickly, and give a small pullback at some point and then continues. Many times those trades may not even follow all the rules anyway.

Just my take. The more pure the setup, the better the odds. That is what I am working on at this time. I have taken many bad, non-pure, trades that were not winners. Always my fault in not following the rules. I can say that when I have followed the rules, I have had winners.

It works.

Happy Easter.
  • #3,888
  • Apr 24, 2011 10:32am Apr 24, 2011 10:32am
I see what you mean about the HL. But then my question is how would I have handled the trade... If I took the long opportunity I would have been stopped out.

So was there a reason not to be long on this trade or was this just one of the losers?
  • #3,889
  • Apr 24, 2011 10:41am Apr 24, 2011 10:41am
Quoting PipRiderFX
I see what you mean about the HL. But then my question is how would I have handled the trade... If I took the long opportunity I would have been stopped out.

So was there a reason not to be long on this trade or was this just one of the losers?
Here is my understanding from seeing/watching what Divergence has said.

You are correct in the fact that there is support at the previous HH that you have listed. The overall trend is up until breaking the HL as discussed. You see that the price went through the support at your HH and then tested the previous HH as now resistance. I would have looked for a countertrend trade short as it bounced off the new resistance. Had it simply bounced off the HH and not gone through I would have looked for a long setup entry again. But because it went through, had I been trading there it would have been a countertrend short. Until it goes through the previous HL or bounces and goes back up.

From what I have seen you would be trading and looking for countertrend trades until it tests/bounces off of an area of support and goes back with the main trend. This is also why Divergence talks about if you only take the trades with the trend you can be very successful and keep out of trouble with countertrend trades. Look at some of the charts where the trend bounces off the previous HL or LH and then continues the main trend. That is where you want to get back in. If it goes through, and then pulls back to test, you are looking for a new trend direction.

That is my understanding and the way I have been watching and looking for trades. Hope that helps.
  • #3,890
  • Apr 24, 2011 11:17am Apr 24, 2011 11:17am
OK so you can take counter trend trades then? If the momentum is in that direction?

Also I have another question. During my testing I have found that trades that have not worked out have occurred when there has also been divergence on the RSI. So with that in mind even if I am not going to trade the divergence setups initially, should I still be using the RSI as a reason not to get into a trade if it is showing Diveregence at the time of entry?

Thanks
  • #3,891
  • Apr 24, 2011 11:44am Apr 24, 2011 11:44am
Quoting PipRiderFX
OK so you can take counter trend trades then? If the momentum is in that direction?

Also I have another question. During my testing I have found that trades that have not worked out have occurred when there has also been divergence on the RSI. So with that in mind even if I am not going to trade the divergence setups initially, should I still be using the RSI as a reason not to get into a trade if it is showing Diveregence at the time of entry?

Thanks
Yes, you can take counter trend trades. It is up to you on how risky you want to be. Many have traded the counter trend until it hits the HL or LH and then waits to see what happens.

One of the main rules to this system is to not trade the divergence on the RSI in the direction of the trend. If divergence forms on the RSI, wait for a pullback, new trend, trend continuation, and then get back in. Divergence mentions that he bails on a trade as soon as divergence forms during a trade.

Part of the system is trading the divergence/123 setups. I will not attempt to explain this part of the system. There are examples and the rules are all over the thread.

Bottom line is that you can trade and be very profitable with just going in the direction of the trend, wait for a pullback and trade. This is the basis for the entire system.
  • #3,892
  • Apr 24, 2011 11:46am Apr 24, 2011 11:46am
Hi Everyone,

Sorry one more question... for now anyway :-)

Am I right in assuming that we are only interested in trades once the trend is in motion. So for example in the attached chart, even though the overwhelming trend is down the current price action is sideways so we would be standing aside?

Is that correct?

Thanks
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  • #3,893
  • Apr 24, 2011 12:17pm Apr 24, 2011 12:17pm
Quoting PipRiderFX
Hi Everyone,

Sorry one more question... for now anyway :-)

Am I right in assuming that we are only interested in trades once the trend is in motion. So for example in the attached chart, even though the overwhelming trend is down the current price action is sideways so we would be standing aside?

Is that correct?

Thanks
I haven't pulled up any charts for that time frame back in March so I will take your word with the down trend.

Sideways markets are at your own risk. Some have been trading the bounces off of the support and resistance that bound the market. Others have been waiting for a clear direction. Sometimes a div/123 setup occurs at the point of s/r and might be an opportunity to trade. Just like with any sideways market, it is not as easy to read and is not a trend which this system is a trend system through and through. Enter the sideways market at your own risk. In my book, sideways does not equal trend and therefore I plan on staying away.

The basic rules are on the PDF first page directly quoting Divergence.
Find the Trend
Wait for the pullback
Find the Setup bar
Enter the trade
Manage the trade
Make Money

Nothing said about sideways trading for a trend system.

I am out for the day. Enjoy.
  • #3,894
  • Apr 24, 2011 12:54pm Apr 24, 2011 12:54pm
hey rc thanks man i must have explained it ok you got it just dont over trade and keep your hands off the mouse till the setup comes to you we all want to put on trades but dont you want to be profitable more than just putting on trades? this month has been very tough for me in that there was not many setups in my sessions and like every other trader we also ask the why questions. There are variables to the market which is always moving and changing the setups seem to be happening in london session or not there either because of global stuff like greece and other countries on verge of financial collaspe just like last year at this very time, THINGS CHANGE! BUT there always return to the structure they have been. Example atr of euro is ususally 120-125 over last week its in the 150- 60 ish area because of big days. My expeirence is ( as george bush used to say) stay the course, a 1000 points of light etc lol. In my 10+ years of doing this here is my observation of whats needed to succeed and its this: when you have found a successful method that has a consistent win rate and market changes or even if it doesnt PATIENCE AND DISIPLINE are what separates you from the rest and in this case the rest are the ones that are just not profitable. enough said on this the day 2000 yrs ago that literally changed the world in which we live in forever, it would benifit you if you gave your life to him who will literally change you both now and for all eternally. To him (JESUS) who is able to do excedingly, abudently, and beyond anything we could ask or even think to him be the glory forever and ever amen!!!
  • #3,895
  • Apr 24, 2011 1:15pm Apr 24, 2011 1:15pm
Quoting Rcwso
I haven't pulled up any charts for that time frame back in March so I will take your word with the down trend.

Sideways markets are at your own risk. Some have been trading the bounces off of the support and resistance that bound the market. Others have been waiting for a clear direction. Sometimes a div/123 setup occurs at the point of s/r and might be an opportunity to trade. Just like with any sideways market, it is not as easy to read and is not a trend which this system is a trend system through and through. Enter the sideways market at...
Hey Rcwso,

I just read your last few posts between you and PipRyderFX.....This one of the things I like about this particular forum. So many are willing to give their time to help... Both you and Diamond, and of course Div’s with putting on the FREE video's and his guidance .

So many other threads seem to fall short as many conduct themselves in a manner not conducive to learning.

Thanks to all for positive learning environment.
  • #3,896
  • Apr 24, 2011 1:50pm Apr 24, 2011 1:50pm
SD,

Thanks for the words. Trying to help and explain gives me the understanding. Also, as you mentioned, this thread has stayed true to the rules and system Divergence has set forth for all of us. There are many trying to keep it that way. This is the first thread that has this many posts and people participating that has stayed true. When someone has come in with other ideas people are willing to keep it on track and stop the sidetracks.

For myself at this time, I understand the system, understand the rules. Now it is about learning the discipline and patience to be successful.

Div,
Great words about the importance of today in so many peoples lives. Regardless of backgrounds, history, religion etc for those that this is an important day in history/religion, Happy Easter. Thanks to those that have the respect and decency to allow others their opinion without malice. This thread has been an exception to the norm of so many for those very reasons.

Enjoy the day. Happy trading to all this upcoming week.
  • #3,897
  • Apr 24, 2011 2:07pm Apr 24, 2011 2:07pm
Thank you Rcwso,

I think I understand the basics now and the results seem to be manifesting in my testing. I have a 90+% strike rate!

This week I will start to trade the system in a small way to get to grips with the live aspects, maybe 1/4%.

Is the chat room the place where people go to during the sessions?

Divergence - Indeed this is an important for all. As with most Sundays I was in Church bright and early this morning with my wife and children attending Mass. Thank you for reminding us all of the importance of our faith.
  • #3,898
  • Apr 24, 2011 2:17pm Apr 24, 2011 2:17pm
do you enter in the direction of the trend, when price pulls back, or you enter on high price and go against the trend?
  • #3,899
  • Apr 24, 2011 2:19pm Apr 24, 2011 2:19pm
remember that its not faith in our faith(religouus statements of what we believe)faith is the evidence of in the person who said he is the way the truth and the life and noone comes to god except through him and him alone plus nothing
  • #3,900
  • Apr 24, 2011 2:53pm Apr 24, 2011 2:53pm
Hi Flag Traders. Still on the road. Enjoying every minute.

Just stopped for coffee and free wi-fi so thought I would take this time to wish everyone a wonderful day. Happy Easter to those of you that observe this holiday.

Tolerance, used out of respect for others, is always a good thing. This thread is a great model of how we all work together for the mutual benefit of the group. A perfect case for "Lead by Example".

Good Hunting All!
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"With a pure heart, The path is Clear" ~ DW
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