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Is divergence trading an effective approach?

  • #41
  • May 7, 2014 11:36am May 7, 2014 11:36am
Quoting gspajon
{quote} Try not to confuse The order flow is what drives the market...not divergence. . 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..
So well enunciated, I love divergence a lot and my method is built around it but sometimes I feel like "......why can't I be in at the very beginning not the continuation, why do I have to settle for the crumbs of the Big Boys?"

For instance GBPJPY today my strategy would have got me in on the trend with the Hidden Divergences but I ask myself when will I be able to call the beginning of a trend and hop in accurately?

I dabbled into Demand and Supply and have not been able to get a grasp on it, could you point me in the way of some down to earth easy to follow studies on Order Flow? It would be greatly appreciated thank you.
Attached Image (click to enlarge)
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Let it turn and find your entry.
  • #42
  • May 7, 2014 5:26pm May 7, 2014 5:26pm
Quoting Intrepidpips
{quote} So well enunciated, I love divergence a lot and my method is built around it but sometimes I feel like "......why can't I be in at the very beginning not the continuation, why do I have to settle for the crumbs of the Big Boys?" For instance GBPJPY today my strategy would have got me in on the trend with the Hidden Divergences but I ask myself when will I be able to call the beginning of a trend and hop in accurately? I dabbled into Demand and Supply and have not been able to get a grasp on it, could you point me in the way of some down...
Good post.. very clear chart.. saw sum things I didn't know or watch for.. Good question .. I don't kknow..
  • #43
  • May 7, 2014 5:29pm May 7, 2014 5:29pm
here I a couple of little diverges on day EUUD.. I short this at 35
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  • #44
  • May 7, 2014 5:31pm May 7, 2014 5:31pm
14 CCI.. Cubes choice.. sucessful so
  • #45
  • May 7, 2014 9:43pm May 7, 2014 9:43pm
Although many professional traders will disagree but in my opinion CCI is sucks , specially for the four hour chart , never trust it , not mentioning MACD also


instead i found RSI & Stochastic with there original default very very helpful .
????
  • #46
  • May 7, 2014 10:56pm May 7, 2014 10:56pm
I am not qualified to make this opinion, but isn't divergence shows failed breakout ?
  • #47
  • May 7, 2014 11:00pm May 7, 2014 11:00pm
The major difficulty in trading divergence is what appears to be a divergence real-time will not be a divergence later, and looking back at charts we do not see those would be divergences.
  • #48
  • May 7, 2014 11:33pm May 7, 2014 11:33pm
Quoting TraderEd
The major difficulty in trading divergence is what appears to be a divergence real-time will not be a divergence later, and looking back at charts we do not see those would be divergences.
Good point. It's easy to see the instance (time & price) on a chart where a signal was profitable. Whereas non-profitable signals can be disguised.
  • #49
  • May 8, 2014 12:12am May 8, 2014 12:12am
Well to my way of thinking there has to be other things come in to it hasn't there.. correct me if I am wrong..in the case of the day EUUD.. at the hi for me there was a strong pivot cluster.. the pattern on the 4 and one hour showed lower hi.. the 4 hr candles were bearish looking .cluster ..to me that is.. trend lines .. etc etc.. and as I am a short term trader.. I got my points out so now don't really give a stuf were it goes but will watch for another short if it breaks the 20 ema and the 2 strong resistance lines it currently sits on.. in my opnion you would have to be a mug if you took the trade purely on diversion..all this is just my opinion of course I may be totally wrong..
  • #50
  • May 8, 2014 12:20am May 8, 2014 12:20am
Quoting wael shami
Although many professional traders will disagree but in my opinion CCI is sucks , specially for the four hour chart , never trust it , not mentioning MACD also instead i found RSI & Stochastic with there original default very very helpful .
Who gives a SHt if u use a CCI.. or a Rsi or a dble wammy cross. .. if it works for you.. I am not saying the CCI is the be all and end all .. I am just saying in my humble opnion it works FOR ME..
  • #51
  • May 8, 2014 12:48am May 8, 2014 12:48am
Quoting danc
{quote} Who gives a SHt if u use a CCI.. or a Rsi or a dble wammy cross. .. if it works for you.. I am not saying the CCI is the be all and end all .. I am just saying in my humble opnion it works FOR ME..
first of all watch ur mouth CCI lover , 2nd i said in my opinion
????
  • #52
  • Edited 2:32am May 8, 2014 2:19am | Edited 2:32am
Repeatedly with divergence or any other TA people will register when it worked and totally ignore the many occurrences when it did not work. Besides the inconvenient fact that it's lagging and therefore meaningless, any price based indicator creates an illusion that certain special wiggles on the indicator are reliable.
  • #53
  • May 8, 2014 4:44am May 8, 2014 4:44am
Apologies if this question is a little bit off-topic.

Lately I got some interest in divergence. Playing around with a chart I got puzzled on how to measure the divergence in the following case (pic.). Shall I:
a- Don't care if the oscillator is crossed by the arrow?
b- Reject the measurement?
c- Adjust the arrow in some way? (how?)
d- Other?
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No greed. No fear. Just maths.
  • #54
  • May 8, 2014 5:53am May 8, 2014 5:53am
almost any indicator built on past performance is going to give you an edge. The present will be somethng like the past unless there is a good, usually detectable, reason.

Who do you pass the basketball to for the shot. The guy with a 30% average who is great on defense but shy about going to the basket, or the with a 60% average who is on a hot tear and crying out "Gimme the ball!"

Both those figures are based on past performance.
  • #55
  • May 8, 2014 7:46am May 8, 2014 7:46am
Attached Image


Divergences using simple moving averages. Two fine examples of Moving average divergence + price divergence equaling a good trade opportunity.
  • #56
  • May 8, 2014 7:57am May 8, 2014 7:57am
Quoting wael shami
{quote} first of all watch ur mouth CCI lover , 2nd i said in my opinion
OH.. Sorry
  • #57
  • May 8, 2014 8:00am May 8, 2014 8:00am
Quoting Rap Skallion
{image} Divergences using simple moving averages. Two fine examples of Moving average divergence + price divergence equaling a good trade opportunity.
well said.....I like to look for some slant on the biggest as a confirmation..
  • #58
  • May 9, 2014 3:11am May 9, 2014 3:11am
I also think that indicators are waste of time because they tend to mislead traders, drawing them away from using their own mind leading to making decisions on underanalyzed ground.
  • #59
  • May 9, 2014 3:31am May 9, 2014 3:31am
you can't see it here because I moved them: Price blew through an S/R line with authority, and there was a news event which drove the one currency significantly in several pairs. Note how the trace peters out when the profit surge comes to a stop. Some call that part of the candle pattern "mountain climbers become exhausted" Avoid entering during that part without good reason.

Divergence of mas: one of the oldest patterns in the book. Still a good indicator.
  • #60
  • May 9, 2014 4:06am May 9, 2014 4:06am
Quoting danc
here I a couple of little diverges on day EUUD.. I short this at 35 {image}
another picture of EUUD day.. CCI diverge.. looks to be working this time.. MMMM must be a fluke
Attached Image (click to enlarge)
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