I love forex. One day it will love me back.
- #2
- Dec 24, 2014 1:33pm Dec 24, 2014 1:33pm
- Joined Jul 2013 | Status: Trader | 2,059 Posts
I am curious of good indicators that do not have divergences in relation to price action. Price action itself and moving averages only come to mind. Are there any other indicators that dont ever diverge?
Even indicators based on S/R levels will still diverge, in the sense that price may respect the S/R level, or it may not. When it plows right through an S/R level, that's divergence, in the sense that a trader may expect price to do one thing according to the S/R level indicator, and it does something different.
Price itself will also show divergence, if you look at it on a candle stick chart. When an upward move starts to "level out" in terms of the angle becoming less sharp, or longer tails on the top of candles, that is divergence, since it shows price is weakening. Price could recover, and break out upward again. Or it could follow the divergent look, and start to retrace.
Or if you just watch the price itself, and it is making higher lows/highs, but then starts also making lower lows. So, when it makes higher highs, and lower lows, I'd say that is divergence, since price is indicating 2 possible outcomes, it will either stop making higher highs, or stop making lower lows eventually.
Anyway, not sure if any of this helps in terms of what you are looking for, but a good question...
- #4
- Dec 25, 2014 6:00am Dec 25, 2014 6:00am
- Joined Jul 2013 | Status: Gone | 1,106 Posts
I certainly see the point benaiah makes, but that is too precise to use for profiting from the market. If you consider every movement is divergence, which technically it probably is, then you will get stuck in the weeds and struggle to succeed. Precision trading is death to your account.
You need to use a decent moving average period that allows you to follow the market through the noise. The most diverging indicator I can think of is the MACD, but that is with the standard settings. It diverges because those settings are wrong. So, you get false signals, or what they call divergence.
Nearly every indicator is written against a moving average or a moving average array. Indicators should tell you is how far price has moved from their center line. The center line matches the corresponding moving average. Once you understand this fact, then it is just a matter of finding a moving average you are comfortable trading against. The indicator will then try to predict when price has moved the farthest from its center.
If you are using a MACD with standard settings, you are comparing two moving averages to each other. It is not comparing a single price action value of the market. It is comparing two different moving averages against each other. While each moving average is measuring price from its center line, the MACD is also measuring the distance between the two center lines. So, if price is going up, but the two moving averages are getting closer together, then it will tell you price is going down, when it really is not. In other words, the settings for indicator are wrong if it divergences. You cannot trade effectively when your indicator is lying to you.
Some people rely on these divergences to show case a method of trading. They use a broken indicator to form a trading system. LOL. It is my opinion that those systems work really well in HISTORY!! If you are an active trader, and your MACD says the trade is going to go the other way NOW, but in reality it does not...then it is useless. But it makes a pretty picture to discuss later, LOL.
If your indicators are diverging, you have bad settings. Ideally your indicator should show a center line cross when prices crosses the corresponding moving average. It should move back to the center line when price moves back to the moving average. Keep working at finding the equilibrium moving average for your currency and time frame. Good Luck
You need to use a decent moving average period that allows you to follow the market through the noise. The most diverging indicator I can think of is the MACD, but that is with the standard settings. It diverges because those settings are wrong. So, you get false signals, or what they call divergence.
Nearly every indicator is written against a moving average or a moving average array. Indicators should tell you is how far price has moved from their center line. The center line matches the corresponding moving average. Once you understand this fact, then it is just a matter of finding a moving average you are comfortable trading against. The indicator will then try to predict when price has moved the farthest from its center.
If you are using a MACD with standard settings, you are comparing two moving averages to each other. It is not comparing a single price action value of the market. It is comparing two different moving averages against each other. While each moving average is measuring price from its center line, the MACD is also measuring the distance between the two center lines. So, if price is going up, but the two moving averages are getting closer together, then it will tell you price is going down, when it really is not. In other words, the settings for indicator are wrong if it divergences. You cannot trade effectively when your indicator is lying to you.
Some people rely on these divergences to show case a method of trading. They use a broken indicator to form a trading system. LOL. It is my opinion that those systems work really well in HISTORY!! If you are an active trader, and your MACD says the trade is going to go the other way NOW, but in reality it does not...then it is useless. But it makes a pretty picture to discuss later, LOL.
If your indicators are diverging, you have bad settings. Ideally your indicator should show a center line cross when prices crosses the corresponding moving average. It should move back to the center line when price moves back to the moving average. Keep working at finding the equilibrium moving average for your currency and time frame. Good Luck
You cannot be extraordinary by being normal
- #5
- Edited 10:26am Dec 25, 2014 10:15am | Edited 10:26am
- Joined Jul 2013 | Status: Trader | 2,059 Posts
- #6
- Dec 27, 2014 6:37pm Dec 27, 2014 6:37pm
- Joined Jul 2013 | Status: Trader | 2,059 Posts
{quote} Seems we have a difference of opinion. Not worth going to pistols over. I was not saying you were wrong, I was saying you are defining divergence with a too much in the weeds definition. Hard to talk in type sometimes. Anyway, precision kills in my real world experience. I know it, and whether or not you will admit it, you know it too. All good. I am happy. It isn't your thread, or mine, so I will make my brief response and be gone. It is just a matter of my experience versus your theory. I am quite happy with my trading abilities and certainly...
- #8
- Dec 27, 2014 9:19pm Dec 27, 2014 9:19pm
- Joined Jul 2013 | Status: Trader | 2,059 Posts
Cool. Live and learn. Oh, you might want to keep your day job. As big as your ego is, you are guaranteed to fail in Forex. It is a mathematics business, not a personality business. Since you think "precision" is profit, and have a huge head blocking your view, you are going to take a long, long, long, long time before you figure out how wrong you are. Sorry to tell you the truth. I guess no one ever does that to you?? When I came to this thread I was replying to the open dialogue. I had no idea that your responses were the only responses allowed....
I wouldn't even have replied to you if you wouldn't have mentioned my user name in your post. And here you go again attacking me, rather than answering my question, and staying on topic. I never claimed any greatness. You are the one presenting yourself as so much better and more knowledgable. And I never questioned your ability to trade, contrary to your negative posting about me, when you have no idea who I am. You are making a lot of assumptions, as if you know, when you have no clue about me.
You posted in another thread about how your system is based on accuracy, and here in this thread you are posting about precision not working. But Accuracy=Precision. If you base trading on accuracy, then you DO believe in precision.
At any rate. Why not stay on topic? You claim an indicator can be set so that it will never diverge. Prove it. Give any indicator with any settings, and I will prove to you that it will diverge at some point.
- #10
- Dec 27, 2014 9:32pm Dec 27, 2014 9:32pm
- Joined Jul 2013 | Status: Trader | 2,059 Posts
This is why I don't use indicators. They all lag and give false signals and now it seems we can't even agree on the how and why!
I use a couple moving averages, and candle stick charts as my main indicators, but enter trades based primarily on what the price does, i.e. price action patterns, rejection of S/R levels...
- #11
- Dec 27, 2014 9:41pm Dec 27, 2014 9:41pm
- Joined Jul 2013 | Status: Trader | 2,059 Posts
{quote} I was not aware that posts from another thread were necessary to explain to you in this thread. Accuracy refers to win consistency. I do not try to take every pip offered, nor trade every possible direction change. That would be precision by my definition. Rather I use probability and trade to perceived highs and lows. I am not sure this is really something you should argue with me about? I had mentioned a little about that on this thread, but I realize it is over your head. Again, it is real world experience versus your attempt to argue...
Maybe you should work on your reading comprehension? You've assumed you know how I trade, but again, you do not, as you don't know me. Why don't you go attack someone else? You seem to enjoy elevating yourself, which would lead me to believe you have an inferiority complex. Maybe work on your self-esteem a little? Feel better about yourself, then you will play more nicely with others.
Once again, I simply ask you to back up your claim. You cannot do it, and resort to attacking me. Nice try. Epic fail.
- #13
- Edited 10:07pm Dec 27, 2014 9:53pm | Edited 10:07pm
- Joined Jul 2013 | Status: Trader | 2,059 Posts
- #14
- Dec 28, 2014 3:24am Dec 28, 2014 3:24am
- Joined Aug 2007 | Status: Doing It In Dubai | 2,457 Posts
- #16
- Dec 29, 2014 12:01am Dec 29, 2014 12:01am
Ideally your indicator should show a center line cross when prices crosses the corresponding moving average. It should move back to the center line when price moves back to the moving average. Keep working at finding the equilibrium moving average for your currency and time frame. Good Luck
But then that is the same as trading price crossing over a moving average on your main chart window. The MACD just makes it more measurable as it is within a container that is normalised
An expert is a man who has made all the mistakes which can be made
- #17
- Edited 1:04am Dec 29, 2014 12:14am | Edited 1:04am
- Joined Jul 2013 | Status: Gone | 1,106 Posts
You cannot be extraordinary by being normal
