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walterw

Trading the Twiggs Divergence

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Hello to all my fellow traders, here I start a thread I believe will be interesting to interact... I know the indicators "alergia" some of you have, and I understand that.... now this indicator its the most near to "non indicator" indicator.... jejejeje.... what I mean is that, it brings a basic information and lowering its input from 21 to 5 as I did, it almost plots a raw data there wich is much reliable than using so long (preconcieved, forced inputs)... I dont like Hype, I dont trade hyped... I like true facts... but this indicator (not much divulged) really shows money flow.... and when we study volume, we are actually studing money flow... and want to relate it to price action, wich finally gives the trader a definitive edge over the crowd.... I dont know if you all notice that most of the volume setups tend to be countertrend.... well yes, who cares, finally what is trend or countertrend really... if things go on the right direction they are on MY trend.... so here I come with a Divergence aproach, on the extremes of price action, wich I like to see that thru a keltner band, and this divergences call my atention that they show how this "retests" and even more " false break outs" get so clearly presented with this indicator wich denounces the lack of suply or demand with a divergence.... now that its the setup I see with this indicator, the second thing I see is a nice timing tool as he crosses the 0 line.... something like a Delta Shift (delta oscillator 0 line cross) wich calls very nice entries on trades... I did some experiments on 110 tick chart on YM and also a more long term 5 minute ym chart, on both cases, with diferent horizons this setup works very very nice... I attach first examples, will keep adding, I expect your inputs so I can grow with you.... cheers Walter.

5aa70dd00d239_twiggs110t.thumb.png.f95cac7c742138198be6450ac05cf457.png

5aa70dd0166f2_twiggs5min.thumb.png.a95bacf0fb17157bc9aea128d5486a21.png

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Walter - thanks for sharing, interesting charts!

 

Are you exclusively trading this setup or using this in addition to your other trading?

 

Just an FYI for any newbies to divergences - as Walter has illustrated here, be sure to have some sort of filtering system before trading divergences. This is coming from experience... I attached a screenshot where I highlighted all possible divergences on the indicator looking purely at divergences. As you can see, there are many trades, most of which failed. I simply wanted to provide a little real world experience and hopefully save some trader(s) a few bucks before jumping into divergences! The books make them look so easy! :mad:

5aa70dd01b0ae_twiggdiv.thumb.png.d72faeb5b05c81ae759b7200b05153e9.png

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No Brown, fortunately I am not a divergence trader, I trade an argument from dynamic S&R levels that combined with a divergence setup makes a very powerfull trade... you should notice Brown, I marked big pivots on the oscillator that are on exhaustions areas of keltner, that will make your first prospect pivot on the divergence.... in other words a first significative volume surge on an estatisticall extreme area and as you retest does extremes you get a vsa concept of no supply/demand coming in.... cheers Walter.

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trader : this twiggs divergence its not regular mathematical indicator divergence, it actually has volume analisis embedded on its calculation, the twigggs formula its not comparing two averages like macd or other oscillators, twiggs has a volume based formula.... so this divergences are very diferent in nature... cheers Walter.

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If you take off the name of the indicator, it all looks the same. Whether, it is based on stochastics or MACD or Volume doesnt matter. If the indicator made a higher low from a previous low, and price made a lower low from a previous low. It is positive divergence. You might say that volume has to be decreasing as well. That doesn't change what divergence is.

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correct Trader, thats the way we traders read regular or hidden divergences, now the formula you use behind an indicator.... in this case its totaly diferent, so you know your intrinsic calculation is coming from a very diferent and much more reliable aproach, in this case is volume... so finally we are looking for divergences but we are actually analising volume.... cheers Walter.

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