{quote} Predicting Market Movements 85 to 90% Depends on Technical and 15 to 10% Depends on Fundamentals
Passion, Persist, Patience, Protect
- #23
- Edited 6:58am Apr 29, 2014 6:44am | Edited 6:58am
- | Commercial User | Joined Jan 2007 | 1,063 Posts
- #24
- Apr 29, 2014 7:43am Apr 29, 2014 7:43am
- Joined May 2013 | Status: Trader | 1,997 Posts
{quote} As I said in my previous post it is extremely difficult to "know" or even suspect price exhaustion from a technical point of view. The ideal would be to be privy to the order board but that is not available either....and I suspect that is what HFT accomplishes with its super computers. I use volume candles. Candles that show an equal number of contracts traded per bar. While this is not perfect it does help. The concept being that if a volume bar is bullish or bearish (given the same volume per bar), the order flow would also be bullish...
.. thx anyw.
Passion, Persist, Patience, Protect
- #25
- Apr 29, 2014 7:47am Apr 29, 2014 7:47am
- Joined Aug 2011 | Status: Mos P from Cape to Cairo | 2,725 Posts | Online Now
Divergence trading is fine as long as you understand WHAT divergence really is. Many think it is the end all in trading, still others think it is stupid because it uses an indicator which always lags behind price action. WHAT Divergence really is: Divergence is simply the lag in any given oscillator showing itself. What many people call "regular" divergence is (in the case of a bullish trend), that price makes a higher high while the oscillator makes a lower high...but what most DON'T observe is that for this to happen the indicator (along with...
So very helpful
I have come to realize that 'everything works some of the time but nothing works all of the time'
Divergence especially Hidden Divergence can be effective to the extent that you can define the trend, there is always a trend on every time-frame and your oscillator will always play catch-up on every time frame.
What you need to define are, Trend start, Exhaustion, and Continuation, when you have concrete parameters to judge those then observe the behavior of your oscillator at those points then you will come to your own conclusion of how effective divergence is as a strategy.
Let it turn and find your entry.
- #26
- Apr 29, 2014 8:09am Apr 29, 2014 8:09am
- | Commercial User | Joined Jan 2007 | 1,063 Posts
{quote} I know all this my friend, but from your earlier post I thought maybe you got something that we all don't bud
- #28
- Apr 29, 2014 9:01am Apr 29, 2014 9:01am
- Joined May 2013 | Status: Trader | 1,997 Posts
{quote} You didn't really expect me to just give you my system did you?
Passion, Persist, Patience, Protect
- #29
- Apr 29, 2014 9:02am Apr 29, 2014 9:02am
- Joined May 2013 | Status: Trader | 1,997 Posts
Passion, Persist, Patience, Protect
- #31
- Apr 29, 2014 10:06am Apr 29, 2014 10:06am
- Joined Aug 2011 | Status: Mos P from Cape to Cairo | 2,725 Posts | Online Now
{quote} So very helpful
The work you have to do for yourself is to define the trend and which oscillator and settings works best for you and then IMO the hidden divergence is relatively more reliable to follow than the regular divergence
Let it turn and find your entry.
[quote=LizardGizzard;7430478]With all due respect to Kanzler, I have to disagree to an extent. Whilst true that no indicator or setup is guaranteed to make you profitable, divergence can be a tool for you that is extraordinarily useful, in that it can clue you in to a market which MAY have waning momentum. What I have found over the last great many years is that divergence is mostly useful with certain momentum indicators and in time periods relative to the indicator far greater than what most use. If I were stuck on a deserted island with only one divergence indicator (it could totally happen), it would be the CCI, and it would need to be a period greater than 50. IMHO, the best way to utilize divergence is in conjunction with other telltale signs of trend change. Look for candle reversals, trend line breaks, etc. The real trouble with divergence is that while it will often indicate a momentum change, it will in no way tell you how long that change will last. As a result, many who trade divergence far too often think it portends some huge trend change every time, when in fact, the counter trend may be quite brief before resuming. Then they get married to a losing position. Not that I have done that. *cough I like to think of the market as a vehicle on a road and divergence is almost the audible skidding sound of a car going around a corner and changing direction. I'm a sound engineer, so maybe that only works for me. 
Hello LizardGizzard: In my experience, the divergences work as you say, check in your letter, some hidden divergences, which are always easier to take, because they are in favor of the main trend.
Are painted in black.
The CCI 14 is very good mark, both large and small TF.
You use some other combination,?
And as you say, is the complement of S and R, YH YL, RN and Pivots High and Low, or the structure of the market.
Powerful tool, greetings.
Hello LizardGizzard: In my experience, the divergences work as you say, check in your letter, some hidden divergences, which are always easier to take, because they are in favor of the main trend.
Are painted in black.
The CCI 14 is very good mark, both large and small TF.
You use some other combination,?
And as you say, is the complement of S and R, YH YL, RN and Pivots High and Low, or the structure of the market.
Powerful tool, greetings.
{quote} . When the range resolves and then accelerates in the direction of the trend, this tells me all the opposing positions just got stopped out. When this happens there are usually no more NEW buyers to sustain the movement and prices soon fall afterward. .
nothing on it's way till some of the buyers decide to exit also .
????
- #37
- May 3, 2014 7:50am May 3, 2014 7:50am
- Joined Jan 2010 | Status: overcaffeinated.... | 1,345 Posts
si hoc legere scis nimium eruditionis habes
- #38
- May 3, 2014 9:29am May 3, 2014 9:29am
- | Commercial User | Joined Jan 2007 | 1,063 Posts
{quote} i thought when there is an acceleration in the direction of the trend & after the opposing traders exit there positions , even if no new buyers are in , the price should continue at the same acceleration if not faster !!!
The bottom line is: when all the buyers are in...Who's left to push the price higher? There must be more new buyers...when this fails to happen, price will start to tick down in an effort to attract more buyers...this is the structure of the market. When this happens people start to apply a different meaning to these price drops...they begin exiting their buy positions...the first ones to exit are usually the late buyers as they have the most to lose. To exit they MUST enter a sell order in the market, either manually or when price hits a stop. This causes price to fall further now as more and more sellers are entering the market...they are "sellers" because they MUST exit a long position with a sell order...
This will also naturally attract NEW sell orders and further cascade the price action...etc., etc.
Price will ONLY accelerate when a wave of new orders come into the market, either buy or sell...and lets not forget...NOTHING will happen unless there is someone on each side of the trade...if you are buying at the top of a move, someone is selling to you...so you have to ask the question, "who is on the other side of my trade, and why?" My goal has always been to be on the other side of those traders who have to leave the market or lose more money...this is where the large, quick moves come from...liquidation. I try to be the guy on the other of those losers.
The order flow is what drives the market...not divergence. Divergence is simply an anomaly between the price action and a quantifiable math equation. Yes...it does correlate with swings in the market...but not as often as one would think...DO THE RESEARCH...find out for yourself. Divergence is a very good tool when used at the right time...the right time is to detect changes in order flow...and truly, if you can do that effectively, you won't really need divergence...
That being said, I use it a great deal, but not blindly. The question of WHEN to use it is always foremost in my trading. I have developed a method to exploit this pattern, but it is based on ORDER FLOW...not indicators. The divergence is merely a visual tool that provides some mental security to entries...call it a "crutch".
