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Is divergence trading an effective approach?

  • #61
  • May 10, 2014 7:12am May 10, 2014 7:12am
I fault myself for missing one of these: otherwise I had a banner day (260 pips)
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I will try to do better in the future.
  • #62
  • May 10, 2014 9:02am May 10, 2014 9:02am
don't listen to the negativity here. you're in the right direction. divergence won't be the answer to it all, but it's a great start, keep going.
  • #63
  • May 10, 2014 10:31am May 10, 2014 10:31am
Divergence is the only thing I trade and I use RSI only. One indicator combined with intraday Fib levels/Pivots and with a stack of moving averages combined with candlestick patterns and I have all I need to trade Divergence (both hidden and regular). Learn it inside out and you cant go wrong.
Anyone who thinks you cant trade Divergence, have no idea.

But most importantly no strategy or style of trading is profitable unless your risk and money management plan is stable and profitable.
This is just as important as the style of trading you use!!!
  • #64
  • May 10, 2014 11:04am May 10, 2014 11:04am
Actually I find it hard to find a trade in which I profited in which divergence of some kind did not play a role. You might not trade it, but that does not mean it is not there....
  • #65
  • May 11, 2014 3:32am May 11, 2014 3:32am
I'm bemused that so many people think this sh*t works.

Divergence with its fancy name is an example of when your indicator fails, nothing else.
  • #66
  • May 11, 2014 3:41am May 11, 2014 3:41am
Quoting TranceTrader
I'm bemused that so many people think this sh*t works. Divergence with its fancy name is an example of when your indicator fails, nothing else.
Actually I beg to differ.. You can use divergence from your price chart without indicators....
Howlin' at the Moon on the Roof
  • #67
  • May 11, 2014 4:02am May 11, 2014 4:02am
Quoting TranceTrader
I'm bemused that so many people think this sh*t works. Divergence with its fancy name is an example of when your indicator fails, nothing else.
Can you explain to me your argument from this perspective...? Divergence without the indicator.. +1 if you can.. cunt if you C*n't
Howlin' at the Moon on the Roof
  • #68
  • May 11, 2014 4:52am May 11, 2014 4:52am
Quoting TranceTrader
Divergence with its fancy name is an example of when your indicator fails, nothing else.
Funny self-contradicting argument. You say that divergence is bad because it appears when the indicators fail. If you were right, divergence would be great since it would indicate when to distrust the indi. Unfortunately divergence measures something else.

I love it when people criticize tools they don't know how they work, based on no tangible facts.
Almost as funny as people who make extensive use of tools they don't know how they work, based on no tangible facts.

Quoting Wolf_Wicked
{quote} Actually I beg to differ.. You can use divergence from your price chart without indicators....
If you can measure divergence with the chart only you understood (perhaps unconsciously) that divergence measures an acceleration and appears
when the velocity and the acceleration have opposite sign. +1

Still nobody answered my yet simple question
No greed. No fear. Just maths.
  • #69
  • May 11, 2014 5:06am May 11, 2014 5:06am
Quoting PipMeUp
If you can measure divergence with the chart only you understood (perhaps unconsciously) that divergence measures an acceleration and appears when the velocity and the acceleration have opposite sign. +1 Still nobody answered my yet simple question
Precisely, it's a great psychological occurrence, if you're at the peak of a trend and the highs are coming in weaker, then a lot of people will be inclined to start talking profits.. If you're into bubbles then this can trigger the rush for the door..

But I'm more interested in Trance Traders argument from this perspective.. In other words I guess in his view divergence is nothing more than a failure of momentum? or the trend itself? I'm not sure, would love to here his take on it.. really.. Not "having a go" at you Trance Trader, I'm very interested to here your thoughts.
Howlin' at the Moon on the Roof
  • #70
  • May 11, 2014 6:44am May 11, 2014 6:44am
Quoting TranceTrader
I'm bemused that so many people think this sh*t works. Divergence with its fancy name is an example of when your indicator fails, nothing else.
//----

divergence can be recklessly applied, such as when we base our trades on our personal view of the direction which clearly diverges from the markets view.....

but it can be properly applied..... such as when the short term trend, let's say the 12 ma, diverges from the longer term trend, let's say the 26 ma...... there we first have a divergence of the periods and/or timeframes..... and when they converge, we have a signal....... commonly known as the macd.....

place the standard macd ea on the 30 minute gbpusd , with 50 pip profittarget and stoploss, ....... i'd be surprised if it did not double the account within a few years.....

hendrick placed second in the first metaquotes contest using an ea which was in part based on divergence......

and of course the divergence theory can be applied to almost any indicator or indication..... indication meaning price action type events like pivots, support/resistance and such.....

//-----

is divergence the best method for trading..... well i wouldn't go so far as to say that...... but, properly applied, it can double an account were so few do......h
to trade and code, keep both simple... no call to impress....h
  • #71
  • May 11, 2014 8:44pm May 11, 2014 8:44pm
Quoting Rap Skallion
I fault myself for missing one of these: otherwise I had a banner day (260 pips){image}{image}{image}{image}{image}{image}{image} I will try to do better in the future.
I LIKE.. GOOD charts
  • #72
  • May 11, 2014 11:30pm May 11, 2014 11:30pm
Because trends are composed of a series of price swings, momentum plays a key role is assessing trend strength. As such, it is important to know when a trend is slowing down. Less momentum does not always lead to a reversal, but it does signal that something is changing, and that the trend may consolidate or reverse.

Price momentum refers to the direction and magnitude of price. Comparing price swings helps traders gain insight into price momentum. Here, we'll take a look at how to evaluate price momentum and show you what divergence in momentum can tell you about the direction of a trend.
  • #73
  • May 12, 2014 3:26am May 12, 2014 3:26am
"You say that divergence is bad because it appears when the indicators fail"

Wrong. I do not "say" that. I say (or wrote for the literate people) that divergence is just an example of whatever indicator you're using failing (or lagging).

Your conjecture is assuming that conventional indicators provide reliable entry signals (or "work" as you put it),... which they don't.

Quoting PipMeUp
{quote} Funny self-contradicting argument. You say that divergence is bad because it appears when the indicators fail. If you were right, divergence would be great since it would indicate when to distrust the indi. Unfortunately divergence measures something else. I love it when people criticize tools they don't know how they work, based on no tangible facts. Almost as funny as people who make extensive use of tools they don't know how they work, based on no tangible facts. {quote} If you can measure divergence with the chart only you understood...
  • #74
  • May 12, 2014 3:30am May 12, 2014 3:30am
Not sure what you're referring to here, you might need to add some context? I'm talking about the classic delusional technical divergence, as are most in the thread from what I can see.

If you're making up your own version of divergence... then I'll assume that's also bullshit.

Quoting Wolf_Wicked
{quote} Can you explain to me your argument from this perspective...? Divergence without the indicator.. +1 if you can.. cunt if you C*n't
  • #75
  • May 12, 2014 4:13am May 12, 2014 4:13am
Quoting gspajon
{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...
Eminiwatch does some very nice volume divergence and exhaustion indicators for futures markets
  • #76
  • May 12, 2014 5:00am May 12, 2014 5:00am
Quoting TranceTrader
"You say that divergence is bad because it appears when the indicators fail" Wrong. I do not "say" that. I say (or wrote for the literate people) that divergence is just an example of whatever indicator you're using failing (or lagging). Your conjecture is assuming that conventional indicators provide reliable entry signals (or "work" as you put it),... which they don't. {quote}
Lagging and failling are absolutely unrelated matters. BTW the lag isn't bad in itself. The lag of an SMA for instance is what generates the dynamic S/R effect.

Since you wrote that divergence is an example of indicator failing, it means that divergence could sometime avoid a loss due to a false signal. Therefore it would be useful just by avoiding a fraction of the losses. (I don't think this is true anyway)

Also it is not a conjecture (for the literate people). It is a deduction. I didn't assume that conventional indicators provide any reliable entry signals. I start from the idea that a lot of people do and that sometimes they indeed do match with a entry signal. If, when they don't, divergence could avoid the entry, it would then be useful just for that. This is a contradiction of it being useless sh*t.

Because indis are local estimators they can't differentiate a local extrema from a global extrema. Thats' why I never considered an indicator to be a signal provider. An indi is only here to asses a piece of the estimation of the market condition.

An indi usually doesn't give you a YES/NO. It gives you a NO/MAYBE. The MAYBE may or may not trigger a trading decision. This decision will be taken based on other indis, like a higher TF or the fundamentals (which are fallible as well).
No greed. No fear. Just maths.
  • #77
  • May 12, 2014 5:51am May 12, 2014 5:51am
You're conveniently changing context to suit your incoherent nonsense. For the sake of you not writing another load of horse shit, lets just agree to disagree.
  • #78
  • May 16, 2014 12:26pm May 16, 2014 12:26pm
Quoting PipMeUp
Because indis are local estimators they can't differentiate a local extrema from a global extrema. Thats' why I never considered an indicator to be a signal provider. An indi is only here to asses a piece of the estimation of the market condition. An indi usually doesn't give you a YES/NO. It gives you a NO/MAYBE. The MAYBE may or may not trigger a trading decision. This decision will be taken based on other indis, like a higher TF or the fundamentals (which are fallible as well).
Hi, thanks for your posts in this thread; I've found them to be very insightful. I'm not quite sure what you're trying to say here about indicators though. Would you mind explaining what you mean by this (particularly the bit in bold).
  • #79
  • May 16, 2014 12:30pm May 16, 2014 12:30pm
Quoting PipMeUp
If you can measure divergence with the chart only you understood (perhaps unconsciously) that divergence measures an acceleration and appears when the velocity and the acceleration have opposite sign.
Would you also mind explaining this? What exactly do you mean when you say that a divergence appears when 'the velocity and the acceleration have opposite sign'?
Thanks again
  • #80
  • May 16, 2014 12:33pm May 16, 2014 12:33pm
Quoting ECO
Hi, I use two divergence indicators per chart. One for the buyers and one for the sellers. I don't think you can just have one and expect it to be accurate. Find where strong supp/res is , large option expiries, BRN, ect ect .Add good money management and a decent average R:R Ratio. Cheers.........ECO
What makes an indicator specific to either buyers or sellers? Thanks
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