Great, so we all agree divergence patterns are there and they work and from what i can see at least 2 traders here are using them on a daily basis.
Me, im at the start of developing my method so appreciate both your thoughts.
Nkruger, A 1,2 step pattern sometimes 3, is when the oscilator turns in the wild extreme ob/os level first (this is the 1 step), then goes below the zero line turns back up into os/ob territory again but does not have to be as high the second time around then turns back down (2 step). We can take the trade as a high probability entry on the second turn once it breaks your walking or trap trendline.
heres an example...............nkruger or george, have you heard of this type of trade before?
Me, im at the start of developing my method so appreciate both your thoughts.
Nkruger, A 1,2 step pattern sometimes 3, is when the oscilator turns in the wild extreme ob/os level first (this is the 1 step), then goes below the zero line turns back up into os/ob territory again but does not have to be as high the second time around then turns back down (2 step). We can take the trade as a high probability entry on the second turn once it breaks your walking or trap trendline.
heres an example...............nkruger or george, have you heard of this type of trade before?
nkruger
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Now I've seen a pic, I know what you're on about !!
Head and shoulders to some traders ~ to me, a change of trend...... then just watch for lower highs and lower lows on the way down, together with a possible divergence set-up telling you it may reverse again.
Head and shoulders to some traders ~ to me, a change of trend...... then just watch for lower highs and lower lows on the way down, together with a possible divergence set-up telling you it may reverse again.
no its not head and shoulders, sorry looking at my example it does appear that way, sorry but no it does not have to look like h and s
here is a 1,2 step pattern, these are so much more regular and what i usually trade and like i said even more powerful with divergence, try it on your indicators to see if it works, id be interested, thanks.............basically yes a 1,2,3 step can look like a h&s but it does not matter even if it did not we still take the trade as a high probabality trade.
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nkruger
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Sorry mate, down at the bottom of the garden with a few mates, barbie and a laptop, so wont phone at the mo.
Perhaps speak on Monday after the initial excitement on the footy subsides
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rathcoole_exile
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not as much as I'd like to, especially having seen the results that Nick's been producing over the last few months.
I use them for confirmation rather than trade signals, at the moment, but that's only 'cos I'm so busy with everything else I've got on my plate right now. It's my intention, eventually, to follow Nick's methodolgy too, in addition to my own trading style, it's just a matter of time 'cos I'm so busy
im trying out the ftse futures this morning, by the way does this market normally run this slow? ah saying that i think we are pre market at the moment?
I found a failed divegence pattern on the ftse a few days back, here it is...........can anyone explain to me how they would have kept from taking this trade when it broke the trendline on the second leg?, i accept this will happen from time to time no problem, but i must make sure i protect myself as best as possible because i would definately took this trade on the second leg when it broke the trendline and also this is a typical pattern i keep getting caught on...........Would anyone took the trade on the 4th and final leg when it eventually made your profit, and why?..........Been doing alot of research over the weekend on divegence and many traders find them too risky and do not use as a trading signal alone, some trader over at elite even went on to say 'its like playing a game of roulette', I found this dis-couraging i must say but i must admit on friday i had a divergence that went on and on before finally turning, i now accept that my run was fortunate and that there will be these failed divegences like these but im still very confident a strategy can be devised from this.
One idea i had from keeping me out of the bad trades is to make sure market turns first before i take trade, ie break my trendline but also break very nearby and very current s and r before i take the trade
I found a failed divegence pattern on the ftse a few days back, here it is...........can anyone explain to me how they would have kept from taking this trade when it broke the trendline on the second leg?, i accept this will happen from time to time no problem, but i must make sure i protect myself as best as possible because i would definately took this trade on the second leg when it broke the trendline and also this is a typical pattern i keep getting caught on...........Would anyone took the trade on the 4th and final leg when it eventually made your profit, and why?..........Been doing alot of research over the weekend on divegence and many traders find them too risky and do not use as a trading signal alone, some trader over at elite even went on to say 'its like playing a game of roulette', I found this dis-couraging i must say but i must admit on friday i had a divergence that went on and on before finally turning, i now accept that my run was fortunate and that there will be these failed divegences like these but im still very confident a strategy can be devised from this.
One idea i had from keeping me out of the bad trades is to make sure market turns first before i take trade, ie break my trendline but also break very nearby and very current s and r before i take the trade
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does the ftse open at 9.30am ?, seems so slow compared to er2 or the ym.
anyway nkruger can you please explain to me the advantages of a 5 tick stop when from my screenshot you can see again that my stop would have been 9 tick and kept me in the trade, would you not take this trade then if your divergence stop is above 5 ticks?..............also please notice that with a 5 tick stop you would have been stopped out on this trade thats if you would have took it of course, but then if your stop was larger and at 1 tick away from the pivot you would have eventually made your profit.
So am i right in thinking that you would not take a trade if the divegence stop is above 5 ticks?, thanks
anyway nkruger can you please explain to me the advantages of a 5 tick stop when from my screenshot you can see again that my stop would have been 9 tick and kept me in the trade, would you not take this trade then if your divergence stop is above 5 ticks?..............also please notice that with a 5 tick stop you would have been stopped out on this trade thats if you would have took it of course, but then if your stop was larger and at 1 tick away from the pivot you would have eventually made your profit.
So am i right in thinking that you would not take a trade if the divegence stop is above 5 ticks?, thanks
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nkruger
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Footy opens at 8:00am, although you can sometimes see a divergence starting around 7:30.
As I've said before, I will watch a divergence trade start to take shape, and I will then mark the highest point (if it's going to potentially turn short) and then go in at 4 less. If it does go all Pete Tong, I'm only down 5 pips as I work on a 1 pip spread.
Looking at my trading on Friday afternoon, yes I would have had a loss during the time you are talking about, but knowing my overall success % I realise these losing trades are inevitable.
On Friday I had 14 trades, 10 of which were good.
To reiterate; You have to take EVERY trade, otherwise you do not get a true picture of your system (or more accurately, you are not making the best of your strategy)
As I've said before, I will watch a divergence trade start to take shape, and I will then mark the highest point (if it's going to potentially turn short) and then go in at 4 less. If it does go all Pete Tong, I'm only down 5 pips as I work on a 1 pip spread.
Looking at my trading on Friday afternoon, yes I would have had a loss during the time you are talking about, but knowing my overall success % I realise these losing trades are inevitable.
On Friday I had 14 trades, 10 of which were good.
To reiterate; You have to take EVERY trade, otherwise you do not get a true picture of your system (or more accurately, you are not making the best of your strategy)
nkruger
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Classic mistake.
Don't try and keep out of losing trades. If your system says get in - GET IN. If it loses, take the loss, if it hits your profit target, take your profit.
No system works 100% of the time, so don't alter your strategy to try to avoid the losses. Embrace them.
ok thanks very much for the advice
can i be nosey and ask do you make money every day or do you have many losing days?.........if you do have losing days what is your net loss you will take before quitting for the day or do you not have such a rule?
one last thing as this is the first time today i have ever traded the ftse, does it normally run this slow?, and if so is there enough set ups each day?
nkruger i notice you are in chelmsfords, just down the road from me, if you ever want to meet up to discuss trading i will be very willing as im keen to learn more and maybe you could benifit from some of the stuff ive been testing
nkruger i notice you are in chelmsfords, just down the road from me, if you ever want to meet up to discuss trading i will be very willing as im keen to learn more and maybe you could benifit from some of the stuff ive been testing
nkruger
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Really slow this morning, you're right in your observation.
Had 6 trades this morning, but struggling to reach target (4 pips) on the 17 tick set-ups, and I'm on only +11 so far with 2 losing ones.
I'll let you know next time I'm in London, perhaps we could meet up.
Nick
nkruger
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Haven't had a losing day all year so far, although I usually have one maybe two days in a week where I don't reach my daily pip target (20 or 25, depending on the volatility)
If I have 4 losing trades in a row, I leave the study and go and enjoy myself :clap:
nine
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Hi nkruger,
You asked me why I wasn't keen on divergence and I didn't answer at the time. It reflects a number of things none of which should stop someone else from using or benefiting from divergences.
- My personal demon is betting against market direction so anything that encourages it is off my charts
- I spent a few years trading HSI and it's a wonder for diverging and then continuing; frequently with enormous enthusiasm. By contrast the US markets are much more likely to range and thus divergence has a higher success rate.
- I have evolved away from indicators to patterns of price testing at horizontal or ma based support and resistance. One thing I noticed is that all the divergence indicators can also be seen directly on the chart once you learn to look because they all basically show a loss of momentum. And if you look at that loss on the chart (say price has been progressing X points in 10 bars and then after 10 bars it only progresses 0.7X points) then you have your loss of momentum and it will show divergence on a 10,x,y stoch say.
The advantage of reading it directly is that it is adaptive and doesn't have to be tuned to an indicator. As an example a 6,3,3 stoch is just a smoothed comparison of the closing price to a (moving) horizontal channel with its high at the high of the last 6 bars and its low at the corresponding low. The stoch makes the divergence easy to see ... as long as its measurable with a 6 period channel ... but if the market is a bit faster this morning you might need a 4 period stoch to see it. If slower you might need a 10 period stoch. Whereas if you train your eyes to perceive the loss of momentum you will adapt to the market as you go.
Thoughts only though. I encourage everyone to find their own way of getting the market to talk to them sufficiently clearly that they can build their trading plan.
You asked me why I wasn't keen on divergence and I didn't answer at the time. It reflects a number of things none of which should stop someone else from using or benefiting from divergences.
- My personal demon is betting against market direction so anything that encourages it is off my charts
- I spent a few years trading HSI and it's a wonder for diverging and then continuing; frequently with enormous enthusiasm. By contrast the US markets are much more likely to range and thus divergence has a higher success rate.
- I have evolved away from indicators to patterns of price testing at horizontal or ma based support and resistance. One thing I noticed is that all the divergence indicators can also be seen directly on the chart once you learn to look because they all basically show a loss of momentum. And if you look at that loss on the chart (say price has been progressing X points in 10 bars and then after 10 bars it only progresses 0.7X points) then you have your loss of momentum and it will show divergence on a 10,x,y stoch say.
The advantage of reading it directly is that it is adaptive and doesn't have to be tuned to an indicator. As an example a 6,3,3 stoch is just a smoothed comparison of the closing price to a (moving) horizontal channel with its high at the high of the last 6 bars and its low at the corresponding low. The stoch makes the divergence easy to see ... as long as its measurable with a 6 period channel ... but if the market is a bit faster this morning you might need a 4 period stoch to see it. If slower you might need a 10 period stoch. Whereas if you train your eyes to perceive the loss of momentum you will adapt to the market as you go.
Thoughts only though. I encourage everyone to find their own way of getting the market to talk to them sufficiently clearly that they can build their trading plan.
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