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D1 & h4 divergence and momentum trading

  • #1
  • First Post: Edited Aug 3, 2015 1:01pm Jan 6, 2015 10:52am | Edited Aug 3, 2015 1:01pm
WELCOME

It's been a roller coaster ride for me in this Forex trading journey but I'm not quitting.
Had time to sit back and reassess my game and I found something that would work better across multiple pairs from the Daily and 4 hourly perspective but still taking entries from the M1 charts.

The strategy is simple:

Find a divergence in D1 or H4, wait for momentum to shift then find an entry in M1.

I tried this with H1 but found that the higher time frame momentum always held sway over my trades thus producing dismal returns, so now the aim is to find high ADR pairs and just follow the Divergence and momentum shifts.

Again entries can be found on the M1 TF by waiting for a retracement on the D1 or H4 and a continuation, but sometimes -I gotta warn you, you cannot tell if a retracement is thru.

So I'm done with chasing 8 or 12 pips, I'm aiming for 30 to 40 pips net minimum per day meaning I will take new signals when my initial signal is in green and move the first trade to BE.
targets will be RN, BRN, Pivots and S&R

Indies.

D1 & H4
Stoch 2 2 2
2SMA close shift 2
Fibonacci Pivots
ICT Big and Mid Figures
ICT Asian Session Range
P4L clock

M1

Stoch 30 2 2
CCI 30
BB 480 shift 2 SD 1&2
SMA 2880 (D1 2SMA)
SMA 480 (H4 2SMA)
SMA 30 (M15 2SMA)
ICT Big and Mid Figures
ICT Asian Session Range


The hard part has been identifying the M1 entry cos it requires gauging whether price has ended it's retrace. or if there is a new burst of momentum to ride: so the M1 entry is still been fine tuned but the indie settings are over tweaked, doubt if I will still tweak them further. (Sorry still tweaking)
Attached File(s)
File Type: rar D1,H4M1, MATRIX.rar   378 KB | 804 downloads | Uploaded Aug 3, 2015 11:51am
Let it turn and find your entry.
  • #2
  • Jan 6, 2015 11:21am Jan 6, 2015 11:21am
I will quickly say that once a D1 Divergence has been spotted, we move to a H4 chart and wait for either same divergence or momentum shift in the direction of the D1 change.

For instance I merely transitioned from the D1 chart in post 1 above to the H4 chart and the same H4 divergence drawn separately in post 1 was captured (with the difference in the trend line slopes)
Where this is not the case we merely wait for the momentum shift.
Attached Image (click to enlarge)
Click to Enlarge Name: 2015-01-06_18-14-15 GBPUSD D1 & H4.png Size: 78 KB
Let it turn and find your entry.
  • #3
  • Jan 6, 2015 11:51am Jan 6, 2015 11:51am
DIFFERENTIALS

I have noticed that some brokers have different time zones and daily opening and closing times so I have not really researched the effects of this on the overall performance of this strategy between different brokers.
What I found was that I'm more comfortable with brokers who do not offer the Sunday evening trading hours as part of their charts so their Monthly, Daily h4 and H1 charts carry slightly fewer bars, their H4 charts close one hour latter than those with the Sunday evening trading platforms so you might want to consider this when back-testing your D1 and H4 strategies.
Let it turn and find your entry.
  • #4
  • Jan 6, 2015 12:39pm Jan 6, 2015 12:39pm
Today's GBPUSD trading opportunities

I will highlight today's trading opportunity, I should be trading 6 pairs, risking 10 pips to find 30 or 40 pips as volatility will allow, but my resources are limited at the moment so I'm sticking with GU.

GU on D1 showed a continuation of a down trend and seemed support @ 1.51429 saw going to be tested.
H4 showed pre FO that momentum had changed to the upside but the previous days Asian session low acted as resistance and held.
The 04:00 hour candle ended bullish meaning we objectively, based on the chart and info before us go long with an entry in M1@ the beginning of the 08:00 H4 candle.

We find an entry with a CCI divergence and go long but get stopped out @ 10 pips.
We wait for another entry chance to go long but we are denied and the 08:00 hour candle closes red below 2SMA continuing the D1 trend and we start waiting for another entry after the open of the 12:00 hour H4 candle.

A Stoch crossing occurs below the BRN and we either take it or wait for price to retrace further to the BRN which it does and we get another cross of the Stoch at the BRN and bounce-off the 120 SMA this time we achieve 40 pips plus some chances to add on and move to BE while waiting for price to hit TP
The clearest add-on was with the Stoch, RSI and CCI all shouting divergence cancelling out the earlier loss.
Attached Image(s) (click to enlarge)
Click to Enlarge Name: 2015-01-06_19-18-15 GBPUSD D1 & H4 M1 ENTRY.png Size: 85 KB
Click to Enlarge Name: 2015-01-06_19-37-08 GBPUSD D1 & H4 M1 ENTRY.png Size: 94 KB
Let it turn and find your entry.
  • #5
  • Jan 7, 2015 12:24am Jan 7, 2015 12:24am
thumbs up
  • #6
  • Jan 7, 2015 6:56am Jan 7, 2015 6:56am
TODAY'S OPPORTUNITIES
Squandered cos I was not available to take ALL I got to to office to see that Support 2 had been hit during the early Asian Session and a possible re-test was imminent. I missed the first entry cos of some office assignment that required my leaving my desk, took the 2nd signal but got stopped out and meetings with my new Boss and other staff made sure I was unavailable for the 3rd and 4th signals which would have hit TP with opportunity for for add on.

I am sure I need to face trading full time so I can take all my signals.
Attached Image(s) (click to enlarge)
Click to Enlarge Name: 2015-01-07_13-10-25 GBPUSD D1 & H4.png Size: 63 KB
Click to Enlarge Name: GBPUSD D1H4 M1 MATRIX 07 1 15.png Size: 126 KB
Let it turn and find your entry.
  • #7
  • Jan 7, 2015 6:57am Jan 7, 2015 6:57am
Quoting mr.jonkk
thumbs up
Thank you
Let it turn and find your entry.
  • #8
  • Jan 8, 2015 5:02am Jan 8, 2015 5:02am
Just got to the office and missed the pips rain.
Attached Image(s) (click to enlarge)
Click to Enlarge Name: 2015-01-08_11-48-23 GU H4.png Size: 64 KB
Click to Enlarge Name: 2015-01-08_11-48-23 GU M1.png Size: 76 KB
Let it turn and find your entry.
  • #9
  • Jan 8, 2015 9:24am Jan 8, 2015 9:24am
Hi Intrepidpips, nice thread you have here, recently I started trading divergences and hidden divergengences, is not so easy to spot them, have you ever try working in only 1 TF like m15 and what was your experiences?
  • #10
  • Jan 8, 2015 11:23am Jan 8, 2015 11:23am
  •  regme
  • | Joined Mar 2010 | Status: Planning to be like Warren Buffett | 115 Posts
Thanks for discussing your divergence method. Any ebook to understand stoch divergence.
  • #11
  • Jan 8, 2015 11:52am Jan 8, 2015 11:52am
Quoting fxjorr
Hi Intrepidpips, nice thread you have here, recently I started trading divergences and hidden divergengences, is not so easy to spot them, have you ever try working in only 1 TF like m15 and what was your experiences?
I have tried in the past to work on M15 but I always got in the way

Spotting Divergences is just a matter of defining what you are looking for and it's a lot easier in the higher time frames than in M1.
First your choice of oscillator and the parameters you employ matters, for me it's the Stochastic and i prefer to use the high and low option as this covers every move of price in the period candle I'm trading.
Then your definition of trend is very important so you can know if you are trading the Hidden Divergence so you can start to look for retracement into the trend and measure or spot your Divergence.

A good example on the M15 would be to choose the H4 as the bias and 16 M15 candles make up a single H4 candle so I'd pick 16SMA as my trend, I wait for the trend to change and wait for retracement into the 16SMA measure the Divergence and wait for the next candle to close in the direction of the new trend and pull the trigger.
Attached Image (click to enlarge)
Click to Enlarge Name: [GBPUSD] M15 DIV.png Size: 107 KB
Let it turn and find your entry.
  • #12
  • Jan 8, 2015 12:14pm Jan 8, 2015 12:14pm
Quoting regme
Thanks for discussing your divergence method. Any ebook to understand stoch divergence.
Check this out.
https://www.google.com.ng/?gfe_rd=cr...TIC+DIVERGENCE
Let it turn and find your entry.
  • #13
  • Jan 8, 2015 2:44pm Jan 8, 2015 2:44pm
Quoting Intrepidpips
{quote} I have tried in the past to work on M15 but I always got in the way Spotting Divergences is just a matter of defining what you are looking for and it's a lot easier in the higher time frames than in M1. First your choice of oscillator and the parameters you employ matters, for me it's the Stochastic and i prefer to use the high and low option as this covers every move of price in the period candle I'm trading. Then your definition of trend is very important so you can know if you are trading the Hidden Divergence so you can start to...
thanks for such a detailed explanation, i will be looking forward for any updates in your thread.

Have you tried Price Oscilator indicator? it does not goes from - 100 to 100 or 0 to 100 as other oscilators, instead have a value of the diference in Price, I wonder wich one will be easy to read. ? for instance in the picture I attach since very clear to backtest, but I am not sure when to buy/sell in real time, any suggestions? I was thinking to wait for the candle close and if it changes direction then shoot buy/sell.
Attached Image (click to enlarge)
Click to Enlarge Name: eurusddiv3.png Size: 30 KB
  • #14
  • Jan 8, 2015 3:00pm Jan 8, 2015 3:00pm
Quoting fxjorr
{quote} thanks for such a detailed explanation, i will be looking forward for any updates in your thread. Have you tried Price Oscilator indicator? it does not goes from - 100 to 100 or 0 to 100 as other oscilators, instead have a value of the diference in Price, I wonder wich one will be easy to read. ? for instance in the picture I attach since very clear to backtest, but I am not sure when to buy/sell in real time, any suggestions? I was thinking to wait for the candle close and if it changes direction then shoot buy/sell. {image}
Looks like a cool tool to use to spot Divergence, think you could post it if it's not proprietary.

I think the decision to buy or sell would be easy if you can decide if you are trading only with the trend or both counter as well. If you are trading with the trend, define the trend, tend take the Divergences away from the trend. but if not then you can take all the Divergences highlighted.
The problem with Divergences is that they do not tell you how far this new move will go so it's best flowing with the direction of a new trend until it reverses.
Let it turn and find your entry.
  • #15
  • Jan 8, 2015 3:16pm Jan 8, 2015 3:16pm
I found the indicator in the internet here is the web page link, but I made a few modifications, using 5 - 15 EMA and with a line instead of histagram (attatched). as used in the attached pdf file.
Attached File(s)
File Type: mq4 Price Oscillator.mq4   4 KB | 674 downloads
File Type: pdf Hidden_Divergence.pdf   245 KB | 636 downloads
  • #16
  • Jan 8, 2015 11:55pm Jan 8, 2015 11:55pm
Quoting fxjorr
I found the indicator in the internet here is the web page link, but I made a few modifications, using 5 - 15 EMA and with a line instead of histagram (attatched). as used in the attached pdf file. {file} {image}
Thanks very kind of you.
Let it turn and find your entry.
  • #17
  • Jan 9, 2015 4:23am Jan 9, 2015 4:23am
Fxjorr's question yesterday set me thinking that it's been so long that I've tried Divergence on the higher time frames so I took the M15 set up I posted and "curve-fitted" it into M5 and M1 and it changed the look of everything.

I kept the Stoch, RSI and CCI settings in M1 unchanged (no more tweaking there), but changed the MA and BB settings but I'm not thoroughly satisfied yet.
On the face of it the M5 can stand alone from the H4 but some filtering rules will need to be generated to trade it with the original H4 chart as there's still some conflict between the MA's in H4 and M5

Trading the M5 looks so appealing as the divergences seem easier to spot and it weeds out false starts: now the beauty of the M1 is it gives us the opportunity of pin pointing add-on positions that M5 may not afford us so a combination that is taking the first shot from M5 and then adding on in M1 will create more profitability.
Attached Image(s) (click to enlarge)
Click to Enlarge Name: [GBPUSD] M5.png Size: 116 KB
Click to Enlarge Name: [GBPUSD] M1.png Size: 123 KB
Click to Enlarge Name: [GBPUSD] M1 MULTIPLES.png Size: 111 KB
Let it turn and find your entry.
  • #18
  • Jan 9, 2015 8:01am Jan 9, 2015 8:01am
For the fear of getting spiked out I missed out on massive pips.

My better days are ahead of me.
Attached Image (click to enlarge)
Click to Enlarge Name: [GBPUSD] M1 TP EXCEEDED.png Size: 128 KB
Let it turn and find your entry.
  • #19
  • Jan 9, 2015 1:03pm Jan 9, 2015 1:03pm
SO FAR SO GOOD

I'm trying as hard as I can to stick as close as possible with what I started with, I started with 2SMA mtf-H4 on the M1 chart but decided to switch to 2x240 = 480. Then I veered into the M15 and used 16SMA and scaled it down to M5 to arrive at 48SMA and to M1 at 240SMA but that had almost become a departure from where I started from.

Looking at the charts again I decided to go as far back as possible to what i began with and I noticed that there was nothing broke only the trader needs to accept the fact that this signal may turn out with a negative result.

So I'm sticking with @x240 = 480 om M1 and 480/5 = 96 on M5 and 480/15 = 32 on M15 (if I ever go there)
Let it turn and find your entry.
  • #20
  • Jan 9, 2015 1:15pm Jan 9, 2015 1:15pm
CONFLICTING READINGS

I've tried as much as possible to "curve-fit" all my indicators but still find that they do not always agree.
For instance today the 04:00 H4 candle closed bullish but below 2SMA and the SMA was RED while the M5 and M1 MAs were BLUE and price closed above the MAs.

Had the H4 candle closed Bearish and below the RED 2SMA, I'd have favored shorts but since M5 and M1 MAs were both BLUE and the 08:00 H4 candle opened above the 2SMA, it was okay to take long signals.

Despite all the analysis the market has a mind of it's own and could have decided to go south after pushing up a little while.
Attached Image(s) (click to enlarge)
Click to Enlarge Name: 2015-01-09_19-26-32 GU H4.png Size: 75 KB
Click to Enlarge Name: 2015-01-09_19-47-31 GU M5.png Size: 96 KB
Click to Enlarge Name: 2015-01-09_19-50-27 GU M1.png Size: 93 KB
Let it turn and find your entry.
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