Divergence Traders - When to Enter

[sulong]

Quote from pspr:



What book are you looking at?

That would be " Trading for a living"- Alexander Elder

 

[Walther]

Quote from tradersaavy:




...........like ?...........................

Simplest one's are :
1/ Williams 1.28 method
2/ Power point method where trendlines forming triangle with intersection in the future. When divergence occurs in vicinity of trendlines intersections, it should be a good one.

Then there are advanced methods like Drummond geometry, Wolfe's wave , my own TT method and other's.
These methods require deeper understanding of a price action so only advanced traders or students should try these.

Walter

 

[Grob109]

Quote from AMT4SWA:

I would have entered during the "up candle" at "A" probably in the 1047.50 to 1047.75 price area. At "A" we have two identical candles, the first candle shows price drop and the second candle shows price pop. For me I had 1046.50 that day as a key area of "Support". The failure to push down to this level and hit 1046.50 with a large increase in volume on the "down candle" over the previous candle at "A" shows good support in this area. Now on the second candle at "A" as the price is increasing away from the 1047 area and there is no price action penetrating below the low of the previous candle I would have to enter LONG as the price action moves north. For this LONG as with most of my trades I would go for +1.5 pts for a profit target at 1049, and a STOP at 1046 just below the support level I had at 1046.50 for that day. So in the end I would have a +1.5 pt minimum profit target with a stop at -1.5 pts if I could get an entry price at 1047.50 (the price level for the lower part of the first down candle body at "A").

Agreed:

S into bottom , reversal L, and cover (I was within tick of your target on cover but I do not use targets). I got out on the poor spread offset between INDU and DJ03Z (notes say it was as tight as 20).

I am OT here because the set up the person uses is not going to occur very often nor be reliable when it does. Lots of reasons but would be construed as flaming here.

 

[dbphoenix]

Quote from dbphoenix:



This is from the book. You may have to zoom on it to read it.

There is another type of "divergence" which is a false divergence, a false "Class A". I call it a Class D for convenience when making notes. It occurs when price moves steadily with little or no variation from a trendline or close-fitting MA. The "indicator" will gradually drop away, suggesting a divergence, but its behavior is a function of how the indicator is calculated, not of whether or not it's saying anything about price.

Therefore, just because a stochastic or ADX or MACD or even volume starts to roll over, there isn't necessarily a divergence trade. Know how your indicators are calculated.

 

[Grob109]

Quote from tradersaavy:

snip..snip

What I hope to get out of this tread is more discussion on entry after a divergence occurs. Not just discussion on the example given. I am curious what divergence traders use to decide to enter OR NOT after they see their divergence. [/B]

The question has a deeper basis.

When anyone uses any method for anything, it ,first, has to be dtermined to apply.

Your approach only works when it is applicable. Dhuh... is a normal response by many to this statement.

Other blanket their comments very broadly and miss the limited focus of your query.


As you see, and do not want specific comments on, hardly anyone here traded you illustration for real anyway. They did not experience it using whatever they talk about.

Below find posted (from bottom up) a chart (5 min) and relatavistic indicators: Stoc 5,2,3 and 14,1,3; and absolute indicators: MACD 5,13,6,and volume.

Draw a vertical line on the chart to see when each indicator craps out as a measure. After that you can apply your stuff or any of the other suggestions here. That is the key issue to consider as a topic for what you posted as a first post.

The "go for" post is a subconscious statement of "this (div) doesn't really apply at the point".

phoenix, for his reasons, refers to something not applying as "a failure signal". Read his last sentence as you can see stated what I show as an illustration (relatavisitic indicators crapping out). phoenix ,at this point is still treating relatavistic and absolute indicators as one indicator set so he is not yet able to "see" the differences as the chart illustraTes (absoutes go to neutral instead of crapping out by jumping all over the place with no variation in data.)

I will do a follow up illustration to show you how they turn on again and the flapping around is squelched.

People can learn all this stuff and really keep out of unnecessary trouble.
Today after 12:00 you can see when they come back into play as well.

 

[Grob109]

Quote from Grob109:



The question has a deeper basis.

When anyone uses any method for anything, it ,first, has to be dtermined to apply.

Your approach only works when it is applicable. Dhuh... is a normal response by many to this statement.

Other blanket their comments very broadly and miss the limited focus of your query.


As you see, and do not want specific comments on, hardly anyone here traded you illustration for real anyway. They did not experience it using whatever they talk about.

Below find posted (from bottom up) a chart (5 min) and relatavistic indicators: Stoc 5,2,3 and 14,1,3; and absolute indicators: MACD 5,13,6,and volume.

Draw a vertical line on the chart to see when each indicator craps out as a measure. After that you can apply your stuff or any of the other suggestions here. That is the key issue to consider as a topic for what you posted as a first post.

The "go for" post is a subconscious statement of "this (div) doesn't really apply at the point".

phoenix, for his reasons, refers to something not applying as "a failure signal". Read his last sentence as you can see stated what I show as an illustration (relatavisitic indicators crapping out). phoenix ,at this point is still treating relatavistic and absolute indicators as one indicator set so he is not yet able to "see" the differences as the chart illustraTes (absoutes go to neutral instead of crapping out by jumping all over the place with no variation in data.)

I will do a follow up illustration to show you how they turn on again and the flapping around is squelched.

People can learn all this stuff and really keep out of unnecessary trouble.
Today after 12:00 you can see when they come back into play as well.

Here is a restart illustration.

The key thing to observe is the small range of highs and lows after the restart compared to the wider range during the signal crap out time. not that the ends and closes where data comes form is there to corrolate.

 

[Walther]

Example of triangle timing method.
2min charts of SPX or DOW
connect low at opening and 12:06
connect high at 10:22 and 12:18
trendlines should intersect around 13:04
If you have a divergence signal on your favorite indicator ( CCI, stoch, macd, rsi ... ), enter in the direction of a divergence
Walter

 

[Walther]

Next trade using same triangle method and your favorite divergence indicator should happen at or after 14:34 . Those of you who followed previous trade can see the benefit of timing method used as setup for divergence method.
Walter

 

[MarkB]

Walther, that's a very interesting idea, and your results today with it were most impressive. Could you possibly post a couple of charts to demonstrate? Particularly one with the trendlines plotted for your second call. I'm sure that everyone would find it most informative, especially if you show how you'd figure entry, stop, and profit targets with this method.

Thanks,

Mark

 

[Walther]

Quote from MarkB:

Walther, that's a very interesting idea, and your results today with it were most impressive. Could you possibly post a couple of charts to demonstrate? Particularly one with the trendlines plotted for your second call. I'm sure that everyone would find it most informative, especially if you show how you'd figure entry, stop, and profit targets with this method.

Thanks,

Mark

Mark, that second call was your homework, You should be able to draw lines and learn that way . Do it first your way, then email me at walter904us@yahoo.com and I will send you a chart so you can compare it then.
As far as entry, target and stops goes I would leave it to the individual trader as there is no only one correct approach to it.
Next triangle method intersection for s&p500 is at 10:28est.
Walter