Divergence--untamed beast or man's best friend?

Tsokakis:

Nice trades. I've found the time frame that best reveals the divergence may also contain the degree of the move--smaller TF, smaller move.
 

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Like that first crude trade that's with the major trend, I try to find divergences supporting re-entry in direction of current trend. It's just another way to trade pullbacks.
 

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yes divergences can work, but i have found them to be less effective on the russell for very short time frame and better on longer time frame with any consistency. also for some strange reason i trade the russell off 3 minute charts and NOT tick charts --- but all my es trading is from a 1500 tick chart --- so each futures contract has different behaviors of price movement.

i have found a great way to trade the russell with a very basic set-up of indicators on a 3 minute chart, versus trying to take divergence signals --- but you never know what combination of indicators can spot an edge for trading the russell.
 
Macro:

Thanks for the info. I'm using divergence as one confirmation, like to see it, usually do. I've been using the tick charts partly because I've found it shows the divergences more clearly. Also use longer TF ticks for ES.
 
If you look at historical charts divergence looks like the greatest indicator ever because they appear at almost every top and bottom. Like every other indicator, when you trade real time they have a tendency to work about half the time. Momentum indicators are the only ones I know of that actually do lead the market at times but finding which times is as tricky as everything else about trading.
 
Quote from easyrider:

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[XYZ] indicators are the only ones I know of that actually do lead the market at times but finding which times is as tricky as everything else about trading.
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Hi easyrider,

This is the most profound statement that I ever have stumbled on at ET's. Don't give away any further secrets, you'ld ruin the TA trade.

nono
:cool:
 
EasyRider:

Good points.

I've seen some potential using volume-based indicators like money flow/Chaikin as a leading indicator. For example, I've seen no divergence on longer TF and divergence on shorter TF I'm following. I interpret that as a correction that may be tradable (depending on volatility, where S&R is), that will be followed by at least one more thrust with larger trend.

In the attached chart, the higher TF shows indicator strength in move up, shorter TF, weakness. So, I'm looking for a sell-off, that turned out to be a bigger one than average and a likely rally that at least tests the peak at #1.
 

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Hey, OptionPro:

What have you got overlayed on that chart?

I've been looking at 1-4 hr forex charts, using S&R with divergence. Check out this MACO indicator and how well it gauges strength and coming turns in market.

The bars are colored to match MACD bias.

Thru
 

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