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The Divinity Method

  • #21
  • Edited Apr 26, 2011 4:38am Apr 25, 2011 7:58am | Edited Apr 26, 2011 4:38am
Price reacts to supply and demand not a moving average. It is pure coincidence that price has reacted to supply or demand at the area of the moving average. Moving averages follow price and are derived from price and not independent of price. You might get a 'self-fulfilling prophecy' reaction around this area if there are a very large number of traders using this MA (the 100 is more likely to be reacted to).

If you use this ma alongside supply and demand then you would be getting a more realistic picture of the price action and the ma would be part of your entry/exit or trade management rules, but should never be an indicator to use on it's own. It's pure illusion.
  • #22
  • Apr 26, 2011 1:14am Apr 26, 2011 1:14am
Quoting ha-pattern
Open a plain MT4 chart, put on a Fib Fan.

The closest Fib numbers to 108 are 144 and 89.

Since 144-89=55,
55/89=~.618 and 55/144=~.318 (both Fib %'s),

I decided to try
144-108=36, which gives 36/144=.25,
and 108-89=19, which gives 19/89=.213, in the Fib Fan.
I also included 1-((.25+.213)/2)=.768, to balance the other two #s.

What I did was to align the balancing .768 with the prevailing trend after the next pivot, while placing the device's initial anchor point at a significant turn and the leading anchor point at the next pivot....
That is a fantastic observation! and I'm glad that you have done this exercise, because it gives so much more substance to what I am seeing practically everyday in the market around these levels...

Would you mind chalking up and chart and showing us how it looks to see what you are seeing?

Thank you very much for this astute study into what it is that I am presenting here...?

Thank you for your wonderful contribution!

108 The Divine Number indeed!
  • #23
  • Edited 1:33am Apr 26, 2011 1:22am | Edited 1:33am
Quoting Porkpie
Price reacts to supply and demand not a moving average. It is pure coincidence that price has reacted to supply or demand at the area of the moving average. Moving averages follow price and are derived from price and not independent of price. You might get a 'self-fulfiling prophecy' reaction around this area if there are a very large number of traders using this MA (the 100 is more likely to be reacted to).

If you use this ma alongside supply and demand then you would be getting a more realistic picture of the price action and the ma would be...
Yes, even Sam Seiden says that one can use his theories of Supply and Demand zones in conjunction with other 'lagging' indicators like RSI, Bollinger, MA's etc.

The thing in though that I am saying that this line represents a supply and demand anomaly in the fact that it does act like a buffer for price going either way... sometimes it takes longer and sometimes its a scalpers absolute joy... As seen in the multi timeframe timelapse photography in my first video...

Although in most cases when not trading off the M1 line, you will get into a slightly better price by trading off a pullback into a supply and demand zone... But then we can use a scaling strategy to compound profits off the pullback to these other MA's...

So yes, use this in conjunction with what you are already doing (And share any findings with all of us so we may all benefit)... its just an observation...
  • #24
  • Apr 26, 2011 4:56am Apr 26, 2011 4:56am
Quoting Jalarupa
That is a fantastic observation! and I'm glad that you have done this exercise, because it gives so much more substance to what I am seeing practically everyday in the market around these levels...

Would you mind chalking up and chart and showing us how it looks to see what you are seeing?

Thank you very much for this astute study into what it is that I am presenting here...?

Thank you for your wonderful contribution!

108 The Divine Number indeed!
The trend realigns a bunch of times in most areas, I discovered. And, a good Fib Fan can stretch for eons before taking effect, dropping its utility more.

So, 'cherry-picking', 'didn't test over thousands of trials', and 'use in conjunction with other indicators/devices in a sound overall method' come to mind.

Nevertheless, here's some charts:

(the shortterm example)

Attached Image (click to enlarge)
Click to Enlarge Name: 04262011 03122009 108 fibfan 1.gif Size: 16 KB
Attached Image (click to enlarge)
Click to Enlarge Name: 04262011 03122009 108 fibfan 2.gif Size: 16 KB


-- result of the 108 FibFans above
Attached Image (click to enlarge)
Click to Enlarge Name: 04262011 03122009 108 fibfan 3.gif Size: 13 KB



(the longterm example)

Attached Image (click to enlarge)
Click to Enlarge Name: 04262011 09082010 108 fibfan 2.gif Size: 18 KB
Attached Image (click to enlarge)
Click to Enlarge Name: 04262011 09082010 108 fibfan 3.gif Size: 18 KB
Attached Image (click to enlarge)
Click to Enlarge Name: 04262011 09082010 108 fibfan 4.gif Size: 20 KB


-- result of the 108 FibFans above
Attached Image (click to enlarge)
Click to Enlarge Name: 04262011 09082010 108 fibfan 1.gif Size: 16 KB
  • #25
  • Apr 26, 2011 9:01am Apr 26, 2011 9:01am
Quoting Jalarupa
I have created two video's which show this volatility practically and how one can apply it in a trading strategy. I would appreciate your comment and views on this observation.
Jal, I'm afraid that your videos aren't rigorous enough to convince me that price respects a WMA(108) more than any other randomly drawn line. I'd need to see hundreds more examples, of both success and failure, in order to draw any kind of statistical inference.

Personally, I prefer to stay with concepts that have proven themselves to me, like long term strength, support/resistance, and certain patterns that highlight imbalance. I feel comfortable with these because I believe that they both reflect, and contribute (by way of self-fulfilling prophecy) to, orderflow. But no doubt there are many less conventional concepts that I'm completely ignorant of.

All trading systems ultimately come down to expectancy, i.e. the product of win rate and average RR. If your WMA(108) locates reversal points that are highly accurate, allowing you to set a tight SL that potentially generates high RR trades, then your win rate doesn't need to be high. For example, you could succeed with a setup that picks turning points to within 5 pips accuracy just 20% of the time, if the average bounce is 50 pips, and you're able to manage your trades well enough to catch a decent chunk of that.

Profit is an objective, and universally accepted, goal. If you've managed to construct a profitable system around WMA(108), then you don't need to gain the approval of others, to make it work for you.

Good luck,
David
  • #26
  • Apr 26, 2011 3:50pm Apr 26, 2011 3:50pm
@ha-pattern

That's some mighty pretty looking findings there ;-)

I'm keen to try and plot your findings like you do on your charts...

What pivot are you using? Excuse my ignorance...

@Hanover

Yes, I actually read what you mentioned before your last post and I agree with you, there is a little too much 'faith' required at the present time...

Well luckily it seems that Dukascopy has extended the April video contest to include the month of May, so I hope to be able to provide some solid mathematical observations to back up my allegations. It seems that ha-pattern is also really onto something, but yes I also want to see if we can take this to the next level.

Peace ya'll thank you for watching and displaying genuine interest in what I am presenting here...

Has anyone had any success in the meantime with these lines?

I would also like to post a template including the indicator for MT4 (afaik the indi is free so can I just post it or what's the general rule of thumb for dropping code onto this forum?) I will only be dropping a naked template with the indi and a stock standard MT4 moving average set to LWMA 108
  • #27
  • Last Post: Apr 27, 2011 10:05am Apr 27, 2011 10:05am
http://www.mediafire.com/file/t22w65...1V1N1TY108.rar

http://img189.imageshack.us/img189/2383/d1v1n1ty108.gif

You can click the link to download a very simple Divinity 108 Template...

This tool is for educational purposes only and so that those who are sceptical can put this theory through some back tests...

For more info on the method you can watch the Divinity Movies at my Dukascopy Contest Blog

The introductory video with time lapse real time test of the mechanics of the template as seen attached above

http://www.dukascopy.com/fxcomm/vide...on=watch&id=74

A follow up on the system's success rating over a weeks trading action on the EU

http://www.dukascopy.com/fxcomm/vide...n=watch&id=100

Due to the many questions traders have posed, I will be releasing a third and final video that should put to bed many of the questions around this method and we will look to create something that has the potential to be profitable for all...

Please submit any questions that you may have...

[EDIT] if anyone is curious I took a few trades today on my live account, the first being the pullback to the purple M15 line for 27pips as well as the pullback to the M1 Red line for 20 pips and finally I'm currently in the long trade off the Gold M30 line +10 pips as of posting this... had two small losses as well today when price closed in the opposite direction over the red M1 line... but so far so good... [/edit]
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