Divergences.

Optionpro007

Optionpro007

Greetings.

I use divergences as my primary tool for selecting trades.

I know thruline also trades divergences.

Are there any other traders in this forum using divergences as their main technical tool with consistant success ?

Thanks.
 
Quote from EqtTrdr:

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Thanks EqtTdr.

Unfortunately that search is not going to tell me who has been consistently successful trading div. I am sure a lot of traders have asked questions that I think are somewhat for beginners in the art of divergences.

I would like to form a group, not really to discuss normal divergences but more complex formations, like hidden and reverse divergences.

Anybody ?
 
When I began trading, I used divergence as my primary system. What happened with me was that my equity did not grow, in fact it shrunk. I traded a system sort of like the TIMES method (but my own style) at first. Basically, trades were entered when divergences occurred in the MACD and Stochastics at double tops or double bottoms in the indexes. I had a thread here on it for a long time titled Chronicles of An Idiot. Catchy huh. I also looked for divergences in other indicators as time went on...like the CCI or the Chaikin Osc.

I know reverse divergences exist, but I have never actually found one myself. Its like E = MC squared for me!!

What I finally realized, after many dollars later, was that I was always trading against the trend. Others here warned me that this was a tough road, but I did not listen. Finally, when I lost enough money I learned the lesson myself. I now trade with the trend and have been profitable for the last couple years. Buy high, sell higher kinda thing. I do not even use indicators anymore except to look for patterns on longer time frames or maybe volume spikes.

What type of methodology do you use? Time frames? What indicators?
 
I see your point exactly. Trading divergences by it's own nature means picking tops and bottoms.

I can only say that the only reason I am sticking to this is either because I am a sucker for pain, or it is such a challenge that I am not able to just give up.

Divergences in my view is like an art. Not all divergences are meant to be traded. Divergences only occur when they occur, like everything in TA, meaning one can only trade profitably by making a very educated guess and most importantly sticking to it.

But for position trading, long term is a different story. I don't want to jump in an established trend, I want to be the trend to start with.

Also divergences seen in underlying instruments where the balance of supply and demand is skewed by, for example, earnings announcements, is also too risky imo.

I think you did the right move changing into a trend following system. Everybody says that is the way to go. But I wonder if "everybody" is doing it then how is it that it still works?

Once I have my little system perfected I plan to start a new one for trend following. But wonder why you are interested still in divergences. Is your profit margin not were you would like it to be ? I figure you trade stocks intraday ?


Quote from VisionTrader:

When I began trading, I used divergence as my primary system. What happened with me was that my equity did not grow, in fact it shrunk. I traded a system sort of like the TIMES method (but my own style) at first. Basically, trades were entered when divergences occurred in the MACD and Stochastics at double tops or double bottoms in the indexes. I had a thread here on it for a long time titled Chronicles of An Idiot. Catchy huh. I also looked for divergences in other indicators as time went on...like the CCI or the Chaikin Osc.

I know reverse divergences exist, but I have never actually found one myself. Its like E = MC squared for me!!

What I finally realized, after many dollars later, was that I was always trading against the trend. Others here warned me that this was a tough road, but I did not listen. Finally, when I lost enough money I learned the lesson myself. I now trade with the trend and have been profitable for the last couple years. Buy high, sell higher kinda thing. I do not even use indicators anymore except to look for patterns on longer time frames or maybe volume spikes.

What type of methodology do you use? Time frames? What indicators?
More...
 
What helped me is understanding trend. Being able to define it and realizing at which stage of trend are Divergences most reliable.
 
Quote from optionpro007:

But wonder why you are interested still in divergences. Is your profit margin not were you would like it to be ? I figure you trade stocks intraday ?
More...

My PM is doing fine. Thanks for asking. Always could be better. I have not traded a stock since I bought Microsoft in my 401K in 1997. I trade Futures. I have an automated system that trades the Russell mini. I mainly trade currency futures these days.
 
OptionPro:

I didn't realize you'd started this thread and have attached the weekly silver chart we discussed in a PM. And, yes, I'd like to be a part of a group that's looking beyond the obvious discovery most of us have made (for a price) regarding divergence trading:

Trading regular divergence in isolation will be a net loser.

Other points:

The longer the TF, the more reliable the signals.

Reverse divergence is 'with trend trading' by definition.

Ranging price action best for regular divergence opps.

Trending price action best for reverse divergence opps.

Thru
 

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