Can someone share his opinion on divergence?
- Thread starter EDWINGENTNER
- Start date
Nowadays generation 3 systematic program using multiple systems running simultaneously for looking at different time-frame layers corresponding to various stage of price movements: page 26.
https://www.efficient.com/pdfs/Movi...le_in_Providing_Portfolio_Diversification.pdf
https://www.efficient.com/pdfs/Movi...le_in_Providing_Portfolio_Diversification.pdf
Divergences are not indicators per se.
Divergences can be observed across assets or between an asset's price and an indicator.
Lets focus on the latter, as it seems that that is what you have in mind. And lets think of divergences between price and MACD to keep things specific and thus simple.
A hidden divergence is a pullback entry of sorts. Not useful in my experience.
A regular divergence is a measure of momentum not going along with price. Not useful for me, but I've worked with truly outstanding traders that trade mostly divergences. They would explain their success with the use of divergences, while I would say their edge lies somewhere else (tape reading, trade management, etc) and they are not aware of it. Now, for those who are into fading (i.e. going against the trend), waiting for a regular divergence can be helpful as it forces patience into the trader, and makes the trader only fade once the trend's momentum slowed down.
Just realized this post is under trading software section ... coding divergences is difficult and imperfect .... I would run away from any divergence indicators.
Hope that helps. Cheers.
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Divergences on a stock or sector in relation to the broader market reveals good candidates to short or go long on. For example: when the market has had a few days of a strong sell off I run a scan for stocks that went up. Those are the stocks that will often run the hardest when the market rallies and are less likely to decline should the market sell off continue. I do the same for shorts - running scans on stocks declining when the market has been rallying - these are stocks I want to short.
Thanks. I think it is good idea.
Below is a chart pic, I also posted on another topic, which shows ES on Friday with ROC Rate of Change flat-lining/failing to make lower readings and actually starting to move higher as price continues to drop highlighting the divergence between price itself and slowing momentum of price. But more than an indicator reading is needed to confirm a trade for me. Much more.
Show 500 scenarios without cherry picking and you get no edge.
I "cherry picked" the MRO and the easiest to see and understand for the OP. Don't like it you can take a stroll through the cherry orchard yourself and pick your own.
Meantime I took a glance back to Thursday's ES chart and quickly found 4 more regular and 1 reverse divergence. There are probably plenty of others.
I repeat what I said in my prior post which you either didn't see or chose to ignore - But more than an indicator reading is needed to confirm a trade for me. Much more. -