Divergence Trading Strategy- Advanced

[phantom 16]

Attachment browser: pissing contest.gif by mistairjoe - RC Groups

 

Hardly MM, I just feel that as long as I'm going to participate in these threads then its my obligation to help separate rumor/myth from fact...

 

Some of us here at TL actually want to help other traders, while others just want to show how smart they think they are...

 

BTW, Steve, I owe nothing in the form of proof to you. If you weren't so insolent, I'd provide the proof. I know that others believe me because of the quality of my work...

 

 

Phantom

Edited December 16, 2011 by phantom

[phantom 16]

Sorry DD for derailing your thread...

[MightyMouse 12]

Hardly MM, I just feel that as long as I'm going to participate in these threads then its my obligation to help separate rumor/myth from fact...

 

Some of us here at TL actually want to help other traders, while others just want to show how smart they think they are...

 

Phantom

 

It's all good. In fact, a lot is learned when there is disagreement.

 

MM

[Adrian 10]

1st insight - Retail traders like to pick tops and bottoms, as they perceive that is the way to make money. Problem is, the vast majority of retail traders lose.

 

2nd insight - The biggest problem with trading divergence signals, even if you manage to make some money from them, is that it puts you in a completely wrong state of mind. It causes your brain to be looking for reasons to go against the prevailing trend. Problem is, most of the money made in the markets are by trend followers. And if your brain is looking for divergences, it almost always will mean you are missing out on the much bigger trending moves. It will also result in you having many failed entries when divergence appears then vanishes due to the trend continuing, meaing you have just missed out on another trend move by trying to pick a reversal.

 

So for every profitable divergence signal someone can show me, I can show them 10 failed signals. That just isn't possible when it comes to taking trend signals. Divergence setups can be useful as exit points, but if you wish to discover TRUE divergence signals you need to analyse multiple timeframes.

[steve46 12]

Hardly MM, I just feel that as long as I'm going to participate in these threads then its my obligation to help separate rumor/myth from fact...

 

Some of us here at TL actually want to help other traders, while others just want to show how smart they think they are...

 

BTW, Steve, I owe nothing in the form of proof to you. If you weren't so insolent, I'd provide the proof. I know that others believe me because of the quality of my work...

 

 

Phantom

 

 

You've been asked before (by others) to provide backtest data and you declined

 

Get your story straight princess.

[wrbtrader 10]

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

 

Hi Steve,

 

I thought that was the purpose for this thread...Do or Die is giving real-time trade signals on the research and data he's collected so far. Simply, you guys need to allow the thread to continue and develop and stop debating with the results so far that have overall been profitable.

 

Thus, wait until the thread has concluded and then cast your stones because debating with someone that has shown real-time profitable results so far doesn't make any sense to me unless the purpose is to try to discourage or derail the thread.

 

1st insight - Retail traders like to pick tops and bottoms, as they perceive that is the way to make money. Problem is, the vast majority of retail traders lose.

 

2nd insight - The biggest problem with trading divergence signals, even if you manage to make some money from them, is that it puts you in a completely wrong state of mind. It causes your brain to be looking for reasons to go against the prevailing trend. Problem is, most of the money made in the markets are by trend followers. And if your brain is looking for divergences, it almost always will mean you are missing out on the much bigger trending moves. It will also result in you having many failed entries when divergence appears then vanishes due to the trend continuing, meaing you have just missed out on another trend move by trying to pick a reversal.

 

So for every profitable divergence signal someone can show me, I can show them 10 failed signals. That just isn't possible when it comes to taking trend signals. Divergence setups can be useful as exit points, but if you wish to discover TRUE divergence signals you need to analyse multiple timeframes.

 

Hi Adrian,

 

I don't know what your experience is with divergence trading but let me enlighten you with some facts.

 

• You can get divergence signals as range price action, counter-trend price action or as trend continuation price action. Most traders are brainwash into looking for or believing the only types of divergence are the counter-trend price action.
   
   
  
• There are countless types of divergence methods based upon indicators or based upon price action only (no indicators).
  

I personally know traders that are retail and institutional using divergence signals profitably. Yet, like the few profitable traders out there, they have a good trading plan and divergence signals is just one chapter in their trading book amongst other chapters like risk management, trade management, position size management, proper capitalization, good research tools et cetera.

 

My point is that you've only mentioned divergence signals as counter-trend signals...that's evidence to me that you've had a limited exposure to divergence signals. Thus, you guys really need to think outside the box or at least realize that your experience level is still developing and that you do not know everything.

 

Simply, you don't know everything concerning what profitable traders are doing and you should show some humility when someone starts a thread that post real-time trade signals that have overall been profitable so far.

 

In my +20 years of trading, if there's one thing I've learn is to never debate with a profitable trader real-money or simulator about his/her trade method. Instead, I've learned to ask questions about what he/she is doing so that I can better myself as a trader.

Edited December 17, 2011 by wrbtrader

[steve46 12]

As posted in your comment I am all for it as long as he takes the time to collect the data...

Edited December 17, 2011 by steve46

[Do Or Die 10]

Sorry DD for derailing your thread...

 

LOL, it's all good. I track your thread as well, will make a similar move in future (it's possible to share with people only as much as they deserve).

[Do Or Die 10]

You can get divergence signals as range price action, counter-trend price action or as trend continuation price action.

 

Hi, I've written pages of explanation for all this using charts, examples and what not. In the real world people have have monster ego, they will hate if someone is using a tool profitably via which they have lost money.

 

Edit: You might also remember whose d*** is bigger contest, which brought a major change in TL.

Edited December 17, 2011 by Do Or Die

[Sharp2Be 10]

Do Or Die, interesting thread, thanks for sharing. Will you share your divergence scan at some point?

[Do Or Die 10]

Shorts triggered ABT(54.65), FDX(84.50)

 

Stopped out HES (53.60)

 

Edit: stop HOD for abt, fdx

[Do Or Die 10]

Short FLS(97.46) stop 99.80

[Adrian 10]

@wrbtrader I am fully aware of regular versus hidden divergence. Trading hidden divergence is TREND TRADING. So it isn't really divergence except in the minor sense, and certainly nothing wrong with taking those signals. I've really no idea what type of divergence DOD is taking. I only see endless lists of stock symbols which really mean nothing to me. I'm assuming it is regular divergence.

 

If 'advanced' in this thread is referring to hidden divergence, then I have seen little discussion on it so far. If it is referring to trying to pick the ends of trends then it is standard divergence, and only a tiny % of people trying to use it succeed, and any money they make will be small. And even more so when compared with all the lost opportunity from missed trends they didn't trade due to trying to pick the turning point.

 

The facts are that the money is made in the trend. That is 100% fact. Now what one person might think is just range trading , is in fact multiple trends to someone else. And if a new trend materialises after a divergence, then the trend trader will still have an excellent chance of getting on board anyway, and make much the same money as a divergence trader. Except the trend trader won't have all the false divergence losses from prior to the turn, but instead wil have multiple closed out profits from each of those prior trend moves. Its simple maths really.

 

As I said previously, the beginner wants to put their ego on the line and try to pick turns. They think that is what trading is all about. They want to be able to brag to their friends they sold the high of a move. They won't tel you of course how many goes they had all the way up. Meanwhile, the professional is happy to just take out 30-60% of each trend move, and leave the turns to the mugs.

 

I will say though, that virtually every trend ends in divergence, but you will need to look at many different time frames to find it. And even when you do find it, you will still need to be able to tell the difference beetween false divergence and real divergence. The former occur many times more often than the latter.

[Adrian 10]

@DOD Just out of curiosity, on what time frame are all these trades being taken? I'm just looking at FLs for example.

 

Is that an end of day based signal?

Why did you go short at 97.46? Beyond just saying there was divergence.

Why put the stop only above the high of yesterday? Isn't that rather close?

Why did you enter so far from the recent high when daily divergence occurred days before?

What sized move are you trading for? A couple of days or trading for a new trend?

[Do Or Die 10]

@DOD Just out of curiosity, on what time frame are all these trades being taken? I'm just looking at FLs for example.

 

Is that an end of day based signal?

Why did you go short at 97.46? Beyond just saying there was divergence.

Why put the stop only above the high of yesterday? Isn't that rather close?

Why did you enter so far from the recent high when daily divergence occurred days before?

What sized move are you trading for? A couple of days or trading for a new trend?

 

Read here: http://www.traderslaboratory.com/forums/technical-analysis/11510-divergence-study-discussion.html#post134430 Let me know which questions are yet unanswered.

[Do Or Die 10]

All Long positions stopped out, except PCP.

[Do Or Die 10]

Update:

Open Positions:

-SLB(75.16), +PCP(155.66), -ABT(54.65), -FDX(84.50), -FLS(97.46)

 

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%)

(Bought after gap up) RL(-2.5%), WLP(-1.8%), ZION(-1.3%), EXPD(-1.5%), HES(-2.1%)

[Do Or Die 10]

Stopped out SLB(68.00), FLS(99.80)

[Do Or Die 10]

Update:

 

Open Positions:

+PCP(155.66), -ABT(54.65), -FDX(84.50),

Edit: Moving stop for ABT to 55.01

 

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%), SLB(+9.5%), FLS(+2.4%)

(Bought after gap up) RL(-2.5%), WLP(-1.8%), ZION(-1.3%), EXPD(-1.5%), HES(-2.1%)

 

IMP: These signals are for discussion purpose only. Trade at your own risk

Edited December 21, 2011 by Do Or Die

[Do Or Die 10]

Bought TSO(22.40)

 

Watching for buy WLP, ZION

 

IMP: These signals are for information & discussion purpose only. Trade at your own risk.

[Do Or Die 10]

Buy Triggered ZION (15.41), Buy on WLP if it crosses 65.60

 

Exit FDX during last 15 minutes if it's trading above 83.90

Exit PCP during last 15 minutes if it's trading below 160

 

IMP: These signals are for information & discussion purpose only. Trade at your own risk.

[TheDude 10]

Hey DoD,

 

Out of interest, whats the % p&L of the strategy (even if it's a theoretical/paper one). Does is disprove your detractors?

 

Just out of interest mind you - as we all know, management can make a big difference, and can be used to explain results either way. Forget I asked.

 

Doh!

 

 

Cheers,

[Do Or Die 10]

Overall in some profit, so maybe yes it disapproves them.

 

If they are willing to forgive my one screwup, it has beaten my personal expectation

 

Update:

 

Open Positions:

+PCP(155.66), -ABT(54.65), -FDX(84.50),

Edit: Moving stop for ABT to 55.01

 

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%), SLB(+9.5%), FLS(+2.4%)

(Bought after gap up) RL(-2.5%), WLP(-1.8%), ZION(-1.3%), EXPD(-1.5%), HES(-2.1%)

 

IMP: These signals are for discussion purpose only. Trade at your own risk

 

...

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

[Do Or Die 10]

Update

 

Open Positions:

+PCP(155.66), +ZION(15.41), +TSO(22.40), +WLP(65.61)

 

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%), SLB(+9.5%), FLS(-2.4%), ABT(-0.6%), FDX(+0.6%),

(Bought after gap up) RL(-2.5%), WLP(-1.8%), ZION(-1.3%), EXPD(-1.5%), HES(-2.1%)

 

For Strategy Rules follow: Divergence Strategy- Discussion

IMP: These signals are for discussion purpose only. Trade at your own risk.

[wrbtrader 10]

Hi,

 

Is it possible for you to also show total percentage gain/loss and/or total dollar (points) gain/loss that have been accumulated to go along with the individual stock results. Info that's easily obtained from a spreadsheet or broker statement (real or simulator).

 

Update

 

Open Positions:

+PCP(155.66), +ZION(15.41), +TSO(22.40), +WLP(65.61)

 

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%), SLB(+9.5%), FLS(-2.4%), ABT(-0.6%), FDX(+0.6%),

(Bought after gap up) RL(-2.5%), WLP(-1.8%), ZION(-1.3%), EXPD(-1.5%), HES(-2.1%)

 

For Strategy Rules follow: Divergence Strategy- Discussion

IMP: These signals are for discussion purpose only. Trade at your own risk.