Anyone use my method?

I think it is easy seeing the divergence live. I have no problems with that. The problem is if it is done making new highs. Npp talks about waiting for the last gasp high, but sometimes that does not happen. I have noticed that the divergence can last from 2 bars to as much as 20. The questions is when do you pull the trigger? I have seen situations where I was pissed I did not make the trade and watched profits dissapear because I was waiting for one more high. Then of course I have had situations in which I jumped in too soon and got stopped out and then after the next high there it is. I still need to look into ER9's idea of a +/- 160 CCI to see if that helps.

There are a lot of aritcles out there on divergence. Divergence is a great thing, but it always comes down to when is it enough divergence. You can look at one chart and the divergence was there for only a few bars and then another for tons of bars. Just seeing divergence is generally not enough. None of the articles out there seems to attempt to discuss this problem. They just show charts with the divergence and show then how much the stock went up or down, but they don't point out that you might have had to sit on a huge loss before actually making any money because you might have seen the divergence that was visible for 10 bars, but it felt like continuing for another 10 or 20 bars.

I guess it is just like any system out there. There is nothing that is so simple that you can just learn in a minutes. There is always a lot of instinctive things and npp has done it long enough that he has a good feel for if he should wait for one more high or not. I guess it is something that takes time.

To bad npp is not here anymore to discuss this issue. It is basically the only thing that makes the difference between success and failure.

Rob
 
Without doing extensive research on this, it appears that the CCI +/- 160 does not seem to help much. The problem is that if the adx is over 30, it means the stock is trending and that would mean the CCI will be high anyways. You are still in a situation where you have to always ask yourself if there are more highs to go or if there is enough divergence. It is when the CCI goes +/- 160 when you start getting divergence anyways because it is overextended. So when you are looking at stocks that are at the keltner bands and the adx above 30 the CCI will be at those targets. It is almost impossible for it to not be. Most of the time it will be around +/- 200.

But it is an idea that makes you think what other indicators could help improve the success rate in determining that it is less likely to make another high/low and you can then make a higher percentage of successful trades.

Any ideas? Where are you nopm?

Rob
 
Quote from rgn2000:

Without doing extensive research on this, it appears that the CCI +/- 160 does not seem to help much. The problem is that if the adx is over 30, it means the stock is trending and that would mean the CCI will be high anyways. You are still in a situation where you have to always ask yourself if there are more highs to go or if there is enough divergence. It is when the CCI goes +/- 160 when you start getting divergence anyways because it is overextended. So when you are looking at stocks that are at the keltner bands and the adx above 30 the CCI will be at those targets. It is almost impossible for it to not be. Most of the time it will be around +/- 200.

But it is an idea that makes you think what other indicators could help improve the success rate in determining that it is less likely to make another high/low and you can then make a higher percentage of successful trades.

Any ideas? Where are you nopm?

Rob
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no it wont have much relevance on its own. the point i tried to get across was combining multiple indicators to verify shifts in trend. try adding a 10 minute cci and wait for it to hit +- 160 (or any other value) before looking for divergence....see if it makes any difference.

problem is that what your seeing is a pullback in the trend....not a divergent reversal. i always thought the problem with that meathod was that it alone didnt accuratelly enough confirm the exhaustion (problem your having) hence adding something else to help try to determine that point...although i remember NPP stating in his first thread that over time it was a profitable system.

to clarify though, and i hope im not wasting your time, i dont trade divergence anymore. havn't for quit some time.
 
Quote from rgn2000:

This thread is slowing down, but I thought I would ask anyone who is having success with this trade, how the hell you decide how much divergence is necessary to enter a trade. First of all, I have been adapting this technique to stocks and I think this method is really good and when executed properly it is nothing but a moneymaker at any timeframe (5min, 30min, daily, etc.). But that is the kicker....executing effectively. Everyone knows that working with the 5min charts that if it ends up being a trend day then it is a loser for that day. But most days are not going to be trend days so that is why it is a money maker. However, stocks do trend periodically and that is why the system works.


The question though is, how much divergence is necessary? What I mean is, how do you know when you are at the top? Waiting one bar that does not make a high does not always do it. I have seen a number of occurences where there is really good diveregence and of course adx is above 30 and everything is in motion. Then the stock makes a new high and I get stopped out. At some point though, maybe after making 2 or 3 more highs, the trade will actually work. The key is to get it right at the top and then it works great. Now I know you can't always get it rgiht at the top 100% of the time, but in order to have 70% successful trades you have to get it at the top a lot. Np_pm's latest rule is to not enter another trade if you are stopped out for fear of a trend day. Problem is that again, you have to get it right 70% of the time and it seems like it is not that easy. I have seen the divergence and then get stopped out and then re-enter a trade, and it works or I might get stopped out again and then it works on the next one, but it is hard to get ahead when you do it that way.

Thanks for any help.
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===============
Patterns are subject to change, but have noticed a notably higher number of trend days -1st week
& last week of the month.

Some mid month;
usually not as much as the latter 2 times:cool:
 
Quote from rgn2000:

...But it is an idea that makes you think what other indicators could help improve the success rate in determining that it is less likely to make another high/low and you can then make a higher percentage of successful trades.

Any ideas? Where are you nopm?

Rob
More...

I'll repeat my a portion of my prior most recent message in this thread...

...Approach your research without indicators and you'll have a better chance to finding your answer (big hint)...
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What I'm saying is that there are answers to your problem if you integrate a price action only element into your divergence indicator trading methodology.

To do such you will have to learn more about price action itself (without the indicators) to make you a little less dependent upon indicators.

Then after a few years of such...you'll learn that you don't need CCI or any other indicator to identify divergence patterns.

Yet, you'll always be thankful to NPP because it was him that prompt you to travel down that path via his indicator methodology.

Think outside the box

Mark
 
saico


Registered: Sep 2000
Posts: 402


12-12-05 09:01 PM



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Quote from saico:

Should be a signal.
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Out at close: +3.50

Attachment: nopmtrade2.gif
This has been downloaded 398 time(s).
 
Quote from waytogojoe:

saico


Registered: Sep 2000
Posts: 402


12-12-05 09:01 PM



--------------------------------------------------------------------------------
Quote from saico:

Should be a signal.
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Out at close: +3.50

Attachment: nopmtrade2.gif
This has been downloaded 398 time(s).
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Quote from no_pm_please:

http://www.elitetrader.com/vb/showthread.php?s=&threadid=20761&perpage=6&pagenumber=1

Curious to know if anyone has been using the method I posted in this journal. Still works fine for me.
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I dont use your method.

But of course i use divergencies. They work very well.
In other words 70% of markets movement are showing divergencies, between price and indicators. For both sides divergencies, 1. for counter trend and 2. for continue trend.

Of course there are a lot of other things that work very well.

But analysing the markets without knowing how to read divergencies, would be a bad analysis.

They of course not all, they are just a brick in the puzzle, before price starts to move.

But i prefer to trade one of my setups with a divergence or more in it, the odds are higher then.

:D :D :D
 
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