Xeniz divergence journal

Two trades taken on the H4 with divergence/hidden divergence

Short AUDUSD at 0.7347 TP 0.7283 SL 0.7404
Short USDCHF at 0.9774 TP 0.9750 SL 0.9793

AUDUSD SL moved to BE. Perhaps a little premature (and really doubtful of doing that at all from a "probability tree" viewpoint) but it is early days trying divergence trading.

Update - I have closed both positions, 1 in loss and 1 in profit, for total gain of 0.3%.

Divergence P/L to date: +0.3%

Long AUDJPY 79.96 TP 80.22 SL 79.75.

I know this is a long just under the BRN but it seems to have crossed over it quite a bit.

Edit: I have also opened Long USDJPY at 109.15 TP 109.31 SL 108.98. Similar trade, in hindsight may have been a better option given S/R, trendline etc.

Both the AUDJPY and USDJPY trades were stopped out, a loss of 0.5% and 0.4% respectively.

Divergence P/L to date: -0.6%. W/L rate of 1/4 - 25%

have taken another Long in the AUDJPY.

I know I am two hours late and needed to get in at 79.37, and not overly confident with the trade, but will take it as a record anyway.

Took a long on the EURUSD 5min. Again, a little late to the trade, it is clearly against the trend, and not sure how this timeframe will pan out, but another one for the record.

Stopped out on trade above for a 0.4% loss. Possibly a few pips to be made had I taken it 30mins earlier, as trend continued downwards after the retrace,

Divergence P/L to date: -1.0%. W/L 1/5 - 20%

Would have looked at taking a long in EURGBP but I already have a open position from an different trading strategy, so will not physically add to it. TP and SL would be at the 0.7842 and 0.7790 levels.

Another possible trade - Long in Corn with TP at 3.95, SL at 3.88. Will not be trading though, just observing.

I would also like to see how this one pans out - I don't have the option of taking the trade however. Target 1755, SL 1744

Hi Xeniz,

Thanks for the charts and divergence info. Can you please share your divergence indicator and explain more above it.

Bomi

For the trades above (one - AUDJPY - which I took, the other three I was observing only as unable to take positions)

AUDJPY: TP Hit for 0.5% gain
EURGPB: Did not reach TP, SL would have been moved to BE
Corn: TP target hit
Gold/AUD: TP target hit.

Divergence P/L to date: +0.5%. 9 trades W/L 4/8 - 50%, BE 1 trade

Hi Bomi,

The indicator is a simple MACD only (others use RSI, for example). There are some really good threads on here that can explain divergence much better than I can. There is one for example that talks about the 1-2-3 setup after divergence.


Basically I see "divergence" when the price makes a lower low but the indicator doesnt, so it is a POSSIBLE indicator of a retracement (note that you are then taking a position against the main trend), as in the EURGBP above, and "hidden divergence" when the price for example makes a higher low, but the indicator makes a lower low, indicating possibly that the retracement is over and price is about to revert back to the main trend (as the GOLD/AUD and Corn charts above)

I've done a little bit of manual backtesting, although not too much, hence this thread where I want to record it. The "hidden divergence" seems to have a higher win rate, and you are also taking positions with the main trend. It seems to be about a 70%-80% win rate, and that is high enough for me (I look for 0.5% win for a 0.4% risk, moving to BE if the trade goes approx 2/3 towards the TP target).

Again, trading with divergence is fairly new to me, and should only be one of the reasons a trade is taken if you read what more experienced traders say. For me, it is simple to see, and appears often enough to have a few trades a day without needing to spend a lot of time in front of the computer. And it seems to work much better on higher timeframes (in fact the higher the better)

Long SPX 500. Never traded this before, but set-up seems interesting.

Edit: After 25mins, have moved SL to BE+ a couple of pips

It shot up so closed the trade while I was well ahead (a 1.5% gain)

Edit: 15mins, later, and it has still gone up, would have reached the original TP had I not closed it earlier. However, given the small size of my account, this was a larger % risk/reward, so happy to close it out where I did

Divergence P/L to date: +2.0%. 10 trades W/L 5/9 - 56%, BE 1 trade

Long CADJPY. Normal divergence here, so against main trend. Back to normal R/R ratio.

The above CADJPY was stopped out at a 0.5% loss. I think that rather than trade normal divergence (on the divergence alone), trading hidden divergence seems to have a higher strike rate.

Divergence P/L to date: +1.5%. 11 trades W/L 5/10 - 50%, BE 1 trade

Bearish pattern is forming on the USD/CAD 4Hr/1 Day, I entered the market early on the 17th and got stopped out, but highly suggest you keep your eye on the pair.

Short on CADJPY H1

Edit: SL moved at BE+2

The CADJPY SL was moved to BE+2pips when it was about 0.25% in profit, but came back to hit it. So it was a winning trade, but only just.