UrmaBlume

Very well said Hunter. Delta or my moving window of order flow are hardly mysterious black box indicators. While they haven't been around as long as RSI, MACD & Stochastic, many traders are starting to find they improve the efficacy of thier trading and offer more setups than merely spotting divergences. It may be that the resistance to discussing anything other that price/price divergences is because the topic is out of the OP's depth. Price/Price divergences which are not real divergences at all have been around forever and discarded by those that have suffered the cost of trading them. Price/Price divegences are hardly divergence because how can price diverge from itself. Divergence between price and buying and selling volumes is another matter and can be a very effective means of noting either reduced or increasing strength behind price. Price/Price divergence advanced? Hardly. There is indeed a place for logs and that's where this guy should post his "advanced divergence trading strategy." UrmaBlume

Well said. The title of the thread implies it is to be a discussion about divergences and trading strategies related to divergences, if not and it is to just be a log of your trades you should have said so. Yet still the question remains: "Which form of divergence seems to offer more reliable/useful trade decision support information: Divergences/differences between price and a recalculation of price or Divergences/differences between price and the buying and selling volumes that propel/motivate price?"

There are many indicators both free and for sale that read order flow and the balance of trade - not just mine. I say that divergences between price and the forces that drive price are more useful than divergences between price and just another calculation of price. So, if the topic here is divergence as a strategy then which do you think should be more useful - price compared to price or price compared to the forces that drive price. Readers here are more interested in learning better sources of trade decision support information than they are hearing you complaining about me being in the software business. Everybody already knows about divergences between price and RSI, MACD and Stochastic - far fewer know about divergences between price and order flow. If the whole purpose of Trader's Laboratory is the rational disucssion of trading techniques and technologies, then I propose this question to you and other readers here Which form of divergence seems to offer more reliable/useful trade decision support information: Divergences/differences between price and a recalculation of price or Divergences/differences between price and the buying and selling volumes that propel/motivate price? No reason to get mad or feel threatened - Here I have merely put forth both a premise and a question, both of which are completely on topic. UrmaBlume

Trade Records and whether or not I am a vendor are hardly to topic. Yes, indeed, I do run a software company and I have paid TL for a sponsored thread where I discuss my products. Here, in this discussion of Divergences, you have made much mention of that - I have made none. My premise is that Divvergences that note RSI, MACD & Stochastic are old news and have been used ineffectively for decades by public/retail traders who don't seem to be able to see beyond the sameO, sameO. The second part of that premise, still on the topic of divergence, is that measures of divergence between price and indicators that consider the buying and selling volumes/forces that propel price offers a much more reliable indication of both divergence and pending change. In numbers, a very, very small percentage of total traders make money long term. Also that same very small percentage of traders make a very, very big percentage of the total money that is made. My money bet is that of that very small percentage of those who make all the real money in this game are using Price/RSI divergences. What a huge laugh you would get if you took that approach to any profitable, tech-based trading or hedge fund operation today. How say you? UrmaBlume

I thought the topic here was "Divergene Trading Strategy - Advanced." My point is that divergence trading using RSI, MACD or Stochastic is hardly advanced and has been known and used by the herd for decades with herd type results. As to a live trade record - its your thread so why not post one. My post is about Divergence Trading and discusses divergence between price and the force that propels price instead of the difference between 2 different measures of price which is really no true divergence at all. I have mentioned no product, service or site here. My posts have been on topic and so should your replies. The topic here is Divergence Trading and I say that a Divergence/Difference between price and the forces that drive price is truer measure of divergence than a difference between price and just another measure of price. UrmaBlume

The point is that price is not the best predictor of price and that trade imbalance is what drives price. Thus divergence between raw price movements and the forces that drive price stand to deliver a more reliable signal than divergence between price and just another measure of price. Measures of divergence between price and RSI, MACD and Stochastic are not really so much divergences as a matter of process and settings on the same input. However divergences between price and indicators based on order flow/balance of trade with price as no part of their calculation measure a divergence between price and what drives price. A much more reliable indicator with a greater depth of information. The herd uses RSI, MACD and Stochastics and for using those original, state of the art tools and techniques the herd is rewarded as blind, unthinking, uncreative followers should be rewarded. Information = Equity If your information is the same as everybody else's then expect to have the same result as most everybody else and we all know what that is. UrmaBlume

RSI is still completely based on price. So the divergence is between raw price and a means of measuring price. Divergences that only look at price do not consider the forces that drive price. More reliabe divergeces are the ones between price and the buying and selling volumes that propel price. The chart below shows a session low in the ES where there was an obvious lower low in price but at the same time there was a higher low in the indicator of buying a selling strength and that the higher low in the indicator actually came before the lower low in price. More Price/Balance of Trade Divergences: Cheers, UrmaBlume

FUZE will allow you to use either a free phone line, VOIP or Skype for verbal communication among members and it will also allow members to share screens and only one member needs to have a subscription - free for up to 100 members and the prime user can control access.

You can get reasonable accuracy backtesting/optimizing with intra bar executions using easy language and then re-write the strategy into an indicator using the order objects. The issue with the millisecond timers is that they can only activate an event - they can't store data with any time granularity that is sub 1 minute. This time stamp business is really a shame as one of TS's strongest points is their great data base - 6 mos tick data, continuous contracts even at tick level, more than a decade of 1 minute and higher data and all the great new indexes that go far beyond tick and trin.

These new order objects in TS finally give the developer of automated systems a way around the faulty TS Trade Manager. The bad news about them is that they can't be used in a strategy and thus can't be used in back testing/optimization. The good news is that as they are used in an indicator you can also plot from the same code that executes your trades which you can't do from a strategy. These objects plus the new PSP's add tremendous power and versatility for the astute TS user. The only remaining item to put TS at the top of the heap is a sub-second time stamp.

Steve, A very interesting trade. Could you please explain the triggers/rationale for both entries? If they have to do with the blue bands cound you please desecibe them and tell us "afternoon" time specs for the trade. With nothing but unddefined blue bands and a couple of arrows the post leaves us wondering about rationale/system/method/triggers. cheers UrMaBlume

The markets are defined by a Price/Time Volume Continuum. Speculative Trend Following Trading is best done via a Reversal/Confirmation/Continuation Continuum. At 1055 EST or 0755 PST there was indeed a bottoming spike and a divergence in the fastest time frame. At the same time there was a positive divergence in the 24k chart. The order of the trading continuum is that first comes signs of a reversal. If the first signs of the reversal are not strong enough for you to enter you can wait for a confirmation of the reversal which is a set of Higher Lows or Lower Highs in both price and the indicators and enter on confirmation. If you miss both the Reversal and the Confirmation trades you can again enter on inciations of Continuation as described here. It is up to each trader to collate the information from different time frames and different indications into his trading decisions. While oftentimes the information is not perfect, more experience will help the trader to find more good trades. Yesterday's low was a perfect example of this Reversal/Confirmation/Continuation Trading Continuum. First came the signs of reversal with the spike in commercial trade velocity and next that reversal was confirmed by a series of higher lows and higher highs in both price and net new trade and in multiple time frames. These higher lows and higher highs continued throughout the sesssion for over 20 points, offering several great Continuation Trades. Reversal Confirmation Continuation Again the market is defined by a Price/Time/Volume Continuum and Trend trading is best conducted via the Reversal/Confirmation/Continuation Trading Continuum. cheers

Simply that most trends are a series of actions and reactions. Some of the reactions may just be pauses. You get in, it goes your way - it comes back a bit. You add and move the stop.

In short term trading you add to winners at the end of a reaction, the beginning of the next action and only when you have enough equity in your position to move your stop to at least a break even on the first position and only after an initial move has proved your entry correct. Averaging down or adding to a loser can't be considered in short term trading and probably shouldn't be considered in longer term trading. Remember what Paul Tudor Jones said, "Losers add to Losers." cheers

Sometimes they even offer foresight as in the chart directly above - note how the spike foretells the extreme and the divergence confirms it.

Mead, Thanks for the query. Most users of the TPS Indicator Pack look to make 3 kinds of trades - Reversal, Confirmation and Continuation. Regardless of time frame, continuation trades look to take advantage of a trend. Using the indicator pack there are several indicatons both from price and from V94 and NNT. The first indication of a trend is continuing Lower Lows or Higher Highs in both price and the indicators. Depending on the setting the price chart will indicate trend from either price and the center strip MA or from the RDot Pivots. Higher High Pivots as well as Higher Low Pivots along with higher changes from Red to Blue in the center stripe dots indicate an up trend in price. As you will see in teh charts below, the V94Window indicates trend three different ways: V94Window indicates an up trend with a very small departure below zero after a much bigger excursion above zero V94Windo can also indicate trend with a series of readings, all of which are either above or below zero as shown below V94 can also indicate trend with a series of wither Higher Highs or Lower Lows The Net New Trade indicator indicates trend with either a series of Higher Highs or Lower Lows or a continuous, steep, run. If you are reading these indications of trend in the higher time frames you can get a more timely entry, so you will not be "3 bars late" by looking at the fastest time frame. This first Chart shows continuation in an up trend via very small departures below zero in V94 and well as continuous higher highs and higher lows in both Net New Trade, Price and in Price Pivots: Please Click to Enlarge Image The next 2 charts show the continuation of an up trend via both Higher Lows in price as well as very small departures below zero in the V94Window: Please Click to Enlarge Image Please Click to Enlarge Image These next 2 charts show trend via the V94Window with a with a series of readings, all of which are either above or below zero: Please Click to Enlarge Image Please Click to Enlarge Image Next week I will record and post a webinar demonstrating Reversal Trades, Confirmation Trades and Continuation Trades using the Indicator Pack. cheers pat

Market Position will only return 1, 0, or -1 CurrentShares will return how many you are long or short. MarketPosition * CurrentShares will return true position with a + or - sign.

At the high of today's action in the Euro/Dollar future there was a significant topping spike in the intensity of commercial trade, plus netagive divergence between price and order flow. The first chart below shows the topping spike in comercial trade as well as the divergence between price and orderflow/The V94 Window. The second chart confirms the first with another show of negative divergence between price and order flow. One cannot help but notice how often these same signals repeat themselves in different time frames and in different markets and how much they look alike. Faster time frame w/spike in commercial trade: Please Click to Enlarge Image Slower time Frame confirms the faster time frame: Please Click to Enlarge Image

As far as retail trade goes, I don't believe it has a meaningful effect on price. I believe retail trade never turns price, never leads price and most often chases price. On the other hand, if you have the means, it becomes easy to see that strong, high intensity commercial trade is present on most session extremes. To get really basic the bar below shows the night session open - the day session opend higher and the day closed higher still - the tone was set in the night session and continued throughout the day. True not all days are this obvious but I wanted to provide an example that plainly demonstrates the point. Please Click to Enlarge Image As to spotting the commercial trade that is strong enough to turn the maket - a combination of The V94 Window and these indicators which detect trade at an intensity and velocity impossible for retail trade do a very good job as shown below. These indicators are part of the pack described in this TL post. Almost everyday, one or more local or session extreme is indicated by these spikes as shown below. The point is that without the right tools it is very difficult to differentiate retail/local trade from the kind of commercial trade that turns the markets. With the right tools you can see it every day. I use the tools described here, how do you differentiage intense commercial trade in real time? This chart shows a night session spike that turned the session and set the tone for the rest of the day. Please Click to Enlarge Image A day session high w/spike: Please Click to Enlarge Image Another session extreme w/spike: Please Click to Enlarge Image In this shot these spikes defined a sesssion high in all three major equity index futures and it happened in all three at the exact same time Please Click to Enlarge Image

Maybe its better said that the trading that occurs before the open of the day session often sets the tone for the day session that follows and that probably most of that trade is done by professional traders, many or most of whom are outside the US. How one can tell that it is that trade that sets the tone is that on most days the day session extends the range ONLY in the direction of the tone of the night session.

More important than the fact that the range is greater is the fact that on most days the tone of the Asian and European traders set, that is lead, the tone for the rest of the day session here.

That's because the 24hr session and the day session both close at 1315 PST.

Both the session high and the session low of Friday's, 10/07, trade were again signaled by divergences between price and order flow and confirmed by the same signal in multiple time frames. The session high occurred an hour before the open of the day session and is demonstrated in the first chart below Please Click to Enlarge Image The session low again showed divergences between price and order flow as shown here Please Click to Enlarge Image

On well over half of all trading days the price that offers traders the best opportunity happens during the night session. The reason for this is that professional traders in Europe and Asia most often set the tone for the US trading day. Below is a chart showing an overlay of the 24 hour session and the day session in ES. The 24hr session is in Red and the Range of the Day Session is Shown in Blue. It cannot escape notice that in the majority of the day bars below there is red at one end of the bar and blue at the other which means that if an entry had been made at the red extreme it offered a better potential than an entry made at the blue extreme. Information = Equity The Price that offers the greatest potential most often occurs outside the range of the day session This chart shows the day/nite sessions overlay and the longer term Net New Trade. The second chart down shows the divergence that signaled the top of the whole session which occurred an hour before the open of the day session. Please Click to Enlarge Image The Best price of the day was the high shown below which was indicated by the strong divergence between price and order flow/V94Window. Please Click to Enlarge Image

By its beak you can tell it is a raptor. By its plumage and its stance you can tell it is a young male. This is a fairly rare hawk, who in this case, makes its living from the prop wash of vessels transiting the Miraflores Locks of the Panama Canal. Please click to enlarge this image Cheers UrmaBlume