Divergence Trading Strategy- Advanced

[Adrian 10]

Sorry, I missed seeing the URL to your explanation or ruleset. I will go and read it.

The numbers are random because they have no meaning to anyone here, unless they knowing exactly why you were entering and exiting where you did. And even then, without seeing a visual chart, it means they have to go an apply the rules to each chart to discover if they can replicate your results. Which in a sense isn't always a bad thing, but it does add a level of complexity and hassle without simply being able to see a chart here.

[Do Or Die 10]

Ohh yes, visual depiction is far more appealing. I will mark the charts with comments and post in few hours.

[Do Or Die 10]

This is how a classic divergence is detected:

 

 

Now see below for how the 'advanced divergence is detected. To copy from first post: "BTW, the 'advanced' word in title is more of a cliche; the strategy is actually basic (conceptual); i.e. mark opportunity when a stock seems to move lower while it's internal relative strength actually increases. Earlier detection of RSI divergence also helps in keeping tighter stop. So it helps in both reducing the risk and maximizing potential reward. I use the most recent pivot high, bar high or support as stop loss. "

 

 

I'm now feeling confused as to what I will show on a chart when entering a stock... just RSI with trend line? This strategy is surprisingly simple.

[Adrian 10]

@DO OR DIE I think most people are familiar with traditional divergence. It is easy to see when price reaches a new extreme, yet the oscillator hasn't. Although in your exmaple of early detection, price hasn't even reached new lows yet. What I'm interested in though, is seeing how you might detect divergence that fails to show in traditional oscillators. To show how you can avoid double and triple divergence signals which so regualry occur, before taking a trade. Showing how and when one enters, knowing in all likelihood that the swing point is in place, and you won't be stopped out on a blip. Divergence has been studied for decades. There is a reason the professionals rarely trade them. So if someone claims they have something special, then they need to show how it is superior to the standard divergence signals, which lose money most of the time. And even more important, when do you exit. Are you trading for a big reversal or just a small reaction? I'm yet to see any discussion at all on this thread of any value, let alone 'advanced'.

[Do Or Die 10]

@DO OR DIE I think most people are familiar with traditional divergence. It is easy to see when price reaches a new extreme, yet the oscillator hasn't. Although in your exmaple of early detection, price hasn't even reached new lows yet. What I'm interested in though, is seeing how you might detect divergence that fails to show in traditional oscillators.

I'm using RSI to as measure of internal relative strenght. So if I enter a trade the divergence can be seen using RSI :doh:

To show how you can avoid double and triple divergence signals which so regualry occur, before taking a trade.

Did you note that I'm entering just at the time the market turns around. As mentioned in first post, I can enter with small stop, so I can exit earlier (with profit)!

See the updated chart, there's nothing special about it

Showing how and when one enters, knowing in all likelihood that the swing point is in place, and you won't be stopped out on a blip. Divergence has been studied for decades. There is a reason the professionals rarely trade them. So if someone claims they have something special, then they need to show how it is superior to the standard divergence signals, which lose money most of the time. And even more important, when do you exit. Are you trading for a big reversal or just a small reaction? I'm yet to see any discussion at all on this thread of any value, let alone 'advanced'.

Now you are talking the language of a newbie (plz don't mind). Just because MA crossovers are stereotyped you assume professional traders do not use it. See related thread http://www.traderslaboratory.com/forums/technical-analysis/11081-more-trustworthy-average-ema-ma-vwap-2.html#post132075

 

Well, maybe you are taught so in vendor seminars, or arrived to that conclusion by reading SSRN papers, by I would disagree I'll let me PnL speak. So maybe just stop bashing and let me log live trades.

Well, I don't have much to say

[Do Or Die 10]

I would also like you to re-think about what's advance.

 

Gmail is considered more advanced than Yahoo mail because it is simpler and more intuitive to use (and of course better features). It is NOT considered advanced because it has more fancy buttons.

 

Similarly in trading you do not make an strategy advance by adding rules! it can be made advanced by crossing off the redundant rules. Ask any seasoned trader and he will tell you that the most robust strategies are those which are based on few and independent premise.

[Do Or Die 10]

Update:

 

Exit FDX(82.40), Enter Long PCP(155.66)

 

Open Positions:

-SLB, +PCP

Closed Positions:

DGX(+2.3%), AET(+3.3%), ETN(+8.2%), EOG (+0.8%), CMS(+0.6%), NSC(+1.6%), VRSN(-0.7%), FDX(+1.5%)

 

If you want to follow the journal, these are the only posts relevant so far:

http://www.traderslaboratory.com/forums/technical-analysis/11438-divergence-trading-strategy-advanced.html#post133326

http://www.traderslaboratory.com/forums/technical-analysis/11438-divergence-trading-strategy-advanced-10.html#post133963

http://www.traderslaboratory.com/forums/technical-analysis/11438-divergence-trading-strategy-advanced-10.html#post133966

Divergence Trading Strategy- Advanced - Page 3 - Traders Laboratory Forums

Divergence Trading Strategy- Advanced - Page 8 - Traders Laboratory Forums

http://www.traderslaboratory.com/forums/technical-analysis/11438-divergence-trading-strategy-advanced-9.html#post133835

[MightyMouse 12]

@DO OR DIE I think most people are familiar with traditional divergence. It is easy to see when price reaches a new extreme, yet the oscillator hasn't. Although in your exmaple of early detection, price hasn't even reached new lows yet. What I'm interested in though, is seeing how you might detect divergence that fails to show in traditional oscillators. To show how you can avoid double and triple divergence signals which so regualry occur, before taking a trade. Showing how and when one enters, knowing in all likelihood that the swing point is in place, and you won't be stopped out on a blip. Divergence has been studied for decades. There is a reason the professionals rarely trade them. So if someone claims they have something special, then they need to show how it is superior to the standard divergence signals, which lose money most of the time. And even more important, when do you exit. Are you trading for a big reversal or just a small reaction? I'm yet to see any discussion at all on this thread of any value, let alone 'advanced'.

 

I am going to suggest to the Site Owner that, before anyone is allowed to start a new thread, one should first get your OK to start the thread since you know exactly what everyone wants to see, what is dumb, what everyone thinks, how all professionals trade, and how one should act and post to maintain respect in a public trading forum. Then, if it passes muster with you, then it will be OK for everyone else. It would be a waste to let your omniscience fall to the wayside. You are an asset.

[Do Or Die 10]

Bot RL(141.10), WLP(65.10), ZION(15.00), EXPD(40.80)

[Do Or Die 10]

Bot Added HES(54.75)

 

I made a mistake in yesterday scan, these stocks were supposed to be bought yesterday mid-day, nevermind.

[steve46 12]

Generally speaking Adrian's comment was correct...on the portfolio side, no one trades off divergence, because the result (over the longer term) is inconsistent...the top tier firms have tested it...if it worked they would know it...and eventually it would leak out to the public...the longer term portfolio managers are mostly using a combination of fundamental and technical approaches that have no relation to divergence.

 

for the short term pro trading intraday....divergence doesn't even register on the horizon because they read the tape and have other tools that work better....

 

For the retail trader, trading in between those two time frames (swing trading on a days to weeks time frame) it might work if the trader was willing to take the drawdowns...this is an area where someone might make a discovery that added value....the problem (at least in this thread) is that in order to discover whether a new approach works, you would have to accumulate a lot of data points over more than a few years (and through different market conditions)....just calling a few live trades means very little.

 

I encourage the original poster to continue since he might (if he takes enough time to gather the data) eventually find something that helps him learn to trade..

Edited December 16, 2011 by steve46

[zdo 20]

(and through different market conditions)....

 

and that would be the first mistake...

and that would be the only mistake needed to set up failure...

 

...serial attacks... with

premises, premises, premises...

[steve46 12]

and that would be the first mistake...

and that would be the only mistake needed to set up failure...

 

...serial attacks... with

premises, premises, premises...

 

 

 

No attack intended....an attack (for example) is if I were to call you an ...

 

the post was simply opinion.

Edited December 16, 2011 by steve46

[zdo 20]

“...professionals rarely trade them...”

 

ignorant putz question: Can most traders and managers at

“…top tier firms…”

“…longer term portfolio managers…”

“institutional…”

levels utilize any methods /edges that only work in certain conditions

or are they generally (culturally, 'institutionally') limited to approaches that have been shown to be edges in all conditions?

[Tams 20]

internet is a funny place...

 

it brings out the best of people,

and it brings out the worst of people.

 

it is free,

anybody, who is a nobody, can be a somebody.

 

bring 'em on...

Edited December 16, 2011 by Tams

[zdo 20]

…Tams, you bring out the worst in me

 

 

 

 

 

 

 

 

… these attac - excuse me “opinions” - are coming, in essence, to warn traders away from diverge…in the topical posts, using premises from the ‘institutional’, ‘professional’ , etc world…

 

The warnings are not necessary - just as no warnings, attacks, or ‘opinions’ from those not of your orientation were or are really necessary in your threads. Steve46, weren’t you recently seeing the added resistance of unnecessary “opinions” in your own thread? ...and they usually sprang from out of place premises?

 

The few that are attracted to diverge will be the few that are attracted to diverge, period. … and a few will learn how to use and enjoy them to profit consistently.

[steve46 12]

My comment doesn't warn people away from divergence, but simply suggests that traders may do best trading it on a specific time frame..(swing trading) mostly because it takes time for divergence to develop...if you disagree...so be it...

 

My experience is that traders operating on other time frames are likely to use different tools...

 

Finally, I prefer to see how a technical approach works over a variety of market conditions....since you can't tell when a market is going to change from one regime to another, it only makes sense to test that way...

 

None of this should threaten anyone...so get over yourself...deal with it and move on.

[Tams 20]

My comment doesn't warn people away from divergence, but simply suggests that traders may do best trading it on a specific time frame..(swing trading) mostly because it takes time for divergence to develop...if you disagree...so be it...

 

My experience is that traders operating on other time frames are likely to use different tools...

 

Finally, I prefer to see how a technical approach works over a variety of market conditions....since you can't tell when a market is going to change from one regime to another, it only makes sense to test that way...

 

None of this should threaten anyone...so get over yourself...deal with it and move on.

 

have you read this thread (and his other thread on the same topic) before you posting the above?

or are you saying what you are saying regarding divergence in general?

[steve46 12]

and have YOU read this thread....

 

The orginal poster stated earlier in THIS thread that on the hourly time frame, he had no signals (yet)...this is typical of divergence (all kinds of divergence)

 

once again, and I hope for the last time...divergence takes time to develop..

 

My comment relates to THIS thread and to divergence in general.

[Tams 20]

and have YOU read this thread....

 

The orginal poster stated earlier in THIS thread that on the hourly time frame, he had no signals (yet)...this is typical of divergence (all kinds of divergence)

 

once again, and I hope for the last time...divergence takes time to develop..

 

My comment relates to THIS thread and to divergence in general.

 

yo uare b-shxtting... you have not read this thread... no need to evade.

 

you either make comments to THIS THREAD, or in general. There is no 2 way about it.

There is only one person born yesterday reading this....

Edited December 16, 2011 by Tams

[steve46 12]

Get yourself under control and post something that English speaking people can understand

 

and when you have calmed yourself....go to post 60

 

"no signals on the hourly time frame"

 

Why do you think that is?....because it takes time for the signal to develop....

 

no need to apologize....but next time THINK before you post..

[Tams 20]

Get yourself under control and post something that English speaking people can understand

 

and when you have calmed yourself....go to post 60

 

"no signals on the hourly time frame"

 

Why do you think that is?....because it takes time for the signal to develop....

 

no need to apologize....but next time THINK before you post..

 

you used to post some great stuff.

I complimented you many times.

but lately you are just being little

sorry to see you acting like a fool

reputation takes a life time to build.

you have just lost it.

[phantom 16]

My comment doesn't warn people away from divergence, but simply suggests that traders may do best trading it on a specific time frame..(swing trading) mostly because it takes time for divergence to develop...if you disagree...so be it...

 

My experience is that traders operating on other time frames are likely to use different tools...

 

Folks,

 

Please do not allow comments like this to dissuade your research and trading activities. I have no idea where this gentleman gets his "experience" from, but it is a fact that I personally have traded (macd) divergence on 45s, 1m, 2m, 3m, 4m, 5m, 10m, 15m, 20m, 45m, 75m, weekly (I think you get the picture) charts very successfully and consistently, no matter what the "regime."

 

Like everything else in life, the skill is in the hands of the operator. Just because some people aren't skilled enough to trade successfully using certain tools doe not mean that others cannot perform well using those same tools.

 

To each his own. If you cannot trade effectively using divergence, get some training or stay away from it. But do not let the unskilled traders in this world help you make your own trading decisions...

[steve46 12]

Folks,

 

Please do not allow comments like this to dissuade your research and trading activities. I have no idea where this gentleman gets his "experience" from, but it is a fact that I personally have traded (macd) divergence on 45s, 1m, 2m, 3m, 4m, 5m, 10m, 15m, 20m, 45m, 75m, weekly (I think you get the picture) charts very successfully and consistently, no matter what the "regime."

 

Like everything else in life, the skill is in the hands of the operator. Just because some people aren't skilled enough to trade successfully using certain tools doe not mean that others cannot perform well using those same tools.

 

To each his own. If you cannot trade effectively using divergence, get some training or stay away from it. But do not let the unskilled traders in this world help you make your own trading decisions...

 

Well you would be an expert on unskilled trading...

 

and as far as divergence on all time frames, notice folks that the gentleman cannot comment except for MACD....and even then he doesn't furnish any data....because he has none....

 

If Do or Die is willing to do the research and collect the data necessary to prove his point, I applaud that....

[MightyMouse 12]

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