mechanical divergence

Again sent to me

Divergence indicator..mechanical in its approach I have added stoch to aid with entry will post later..have a play its cool

Again if its been posted in FF before I apologize

Paulus


Note - 20th July 2011

Since the resurrection of of the thread the FX divergence and Stoch indicators are no longer used please go to post 15 which is where i picked the thread up 18months after this initial post

As a quick synopsis

We use OsMa set to 12/26/9 for diversity entry
We use Osma set to 60/312/54 on the same chart to give us trend direction and roughly equates to 15min time frame
TMA bands for qualification for entry and TP

I have left the original FX indicator here some may find it useful

Doesn't show hidden divergence as per my black lines and entry points but gives very good signals with normal divergence

Paulus

wow, you are very creatif, man. plz explain your rules about this system.

oh, can you attach stoch indi and your template.

thx

ok in a bid to make the entry more mechanical I have added another indicator that places an arrow on you chart when ever the stoch cross down down from OB or up from OS.

If we get a divergence signal and a stoch signal at the same time or after we take..but only short signal on down bars long signal on up bars

The black arrow indicate our signals stoch plus divergence

Paulus

Quite simple this Ive marked some black lines here my self the 1st is a great double bottom with divergence on indicator..always look for double top and bottom with divergence

Entries are in big black arrow divergence plus stoch signal

We get a long signal at 1.424380 at 18.14 pm

2nd signal is a higher high in price with a lower low in indicator short at 1.43000 at 18.53

Nice

I do not see the black arrow on my charts. Any suggestions?

Thanks

There are put there by me just to show where both indicators coincide



Paulus

nasdaq
90 pip

i'm confused about the arrows on the fx5 divergence ind. and the arrows on the pa

Hi all

It is a pity that in this thread dedicated to the divergence is very low.
Respond who trades on the divergence-convergence.
I myself have been developing automated trading systems and use the divergence. This system has one drawback - the trend.

great method
gives a good overview of divergences and therefore turns in trend
like it
what a great method
could we possibly discuss this much further as imo its a winner
preempts market turns if used properly
look forward to your reply as you dont seem to take pm s

I have been asked to resurrect this thread

Although I have several projects on the go I periodically go over all my threads dead or otherwise,some times a door opens you see a flash of light or a stumbling block that stopped the thread initially which is then some times months later broken by revelations or indicators found or discovered in another

I will be updating this thread today with some more information

Regards

Paulus

Hey Paulus , i did a quick visual check of the Divergence Indicator on CR Bars, and its far to good , normaly i would fire up the Tradesimulator and see if its repainting , but thats not possible right now , so iam asking you if you saw this FX5_Divergence Indicator repainting AFTER bar close ?

Thanks

To be honest I dont know I havnt seen it repiant but the start of the thread was along time ago..I cant see that it does because it only picks out peaks and troughs against the same in price action

P

ok I will keep this short and sweet hope fuly there wont be too many questions and then you can give it a try next week

The rules

Trading Times

London market open to London market close.
The Asian sessions are not volatile enough for me and the market dies some what when London closes

Time frame
1min

Indicators used
2 colour OsMa I use this so we can see more clearly our entry candle
TMA True this doesn't repaint and is used for entry rule and exit rule

Divergence
We want divergence that is with the current 1min momentum or trend we are not looking for counter trend signals

Shorts

 

1. We look at the green OsMa peaks
2. Peaks must be separated by 1 red trough to gives us clearer clarity for the divergence
3. The entry candle must be above the middle TMA line
4. The exit is the touch of price on the lower TMA line
5. SL is 1 pip above the last swing high which is usually the candle before the signal candle
6. Entry is on the close of the candle when the OsMa goes from Lime green to green

2 example are given below.. I take all my trades on % not pips so I calculate my entry to my SL if that 10pips I then use that and trade 5% of my account and trade the contracts that this calculation gives me

In signal 2 this 1 trade gives me around 30% of account gain because the actual risk is around 5 pips and the actual pips gain is around 30 pips
if 5pips = 5% of my account then 30 pips = 30% of my account

In signal 3 this 1 trade gives me around 10% gain on account
Pips risked is around 12 pips = 5% actual pips gain is around 25pips = 10% of my account

The reason I trade is %

Example

If my risk ie entry to SL is 5pips on 1 trade and 30 pips on another my overall risk will always be 5% of my account and if both stop losses are hit then only 5% on each trade will be lost.. not 5pips and 30 pips

Its the number of contracts that change ie the 5pip SL trade will have far more contract being traded than the 30 pips SL trade in fact 6 times more.

This means making full use of micro mini and main contract sizes

1% can be risked if you wish its personal preference.
I have funded this from substantial gains made on another system and I am trading micro accounts for now i find it better than paper trading.

The advantage of this % trading is that the system can give us that ideal ratio of 3:1 or more risk reward on each trade so 3 losers at 1% can be broken even 1 3:1 RR trade

Its the reason that all signal for shorts must be above the middle TMA line it gives us the edge in getting that ratio

Indicator are below and here are a few more chart examples

Due to my trading charts will be posted at the end of each market close

Hi Paulus
Thanks for all the time you give to Forex Factory.
I find your posts most educational because your ego doesn't keep you from showing both your successes & your loses. Also you keep an even tempo in your responses to other traders which I appreciate (I know you understand what I'm referring to). Are you going to monitor and trade this system on a daily bases?
Thanks again
gmcc

Thanks for the words.. we all need to help one another..yes I will be monitoring this very very closely



P

Monday

After viewing the Frankfurt open I decided to put a longer time frame OsMa on the chart this is for direction

The parameters on the 1min Osma are 12,26,9

Therefore to see the 5min trend I took those figures and multyplied by 5 to give 5min = 60,312,54

If long term OsMa green take long diversity signals according to rules on page 15

If long term OsMa red take short diversity signals according to rules on page 15

Return on account for Monday = + 34%

Hi Paulus

interesting system, one question

you multiplied out the 1m OsMA to get the 5m

for 1m of 12,26,9

shouldn't it be

60,130,45 for 5m?

Not sure how much of a difference it would make though

Regards, John

yikes your right...but on checking back the months signals the original setting is far better its neare 15mins I guess

Cheers

P