ES Journal Archive (2006 - 2008)
- Thread starter Buy1Sell2
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My PnL has not improved as I am using smaller positions for these set-ups, though overall ratio is a lot better, leading to believe that I am onto a solid system here, once I have done it for a while longer. I just have to be careful of the trend days, where divergences do not really work, unless longer time frame used. I really have to thank you for sharing, much appreciated.
I have been using option strike prices as indicators as well. Although I dont trade options. Behavior around these certain numbers can also give you an indication of whether or not you have entered into a chop zone. i.e. 122.50,125,127.50,130,132.50. For now the first and last have held. The 122.50 was clear support, and 127.50 was the closing monthly price of 2 months Jan/May. My guess is they gun for 130 and if this holds the market makes new hi's. If not we trade below 1200 (120)
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That happens sometimes even when one is careful sometimes;
ES profts can add up quick, subtract quickly
If I may suggest something, though you daytrade google, this is more related to futures, I am not sure whether these divergence signals will be workable in stocks as share prices can be extremely news dependant (fundamentals/offloading by members of the board, etc.).
What I have noticed with divergence based trading is that on many occasions by waiting for the right set-up in 30 minute time frames, enables a trader to have a much better entry opposed to shorter time frames. One of the ways to trade these is by reducing position size though and perhaps allowing a wider stop and by doing so you are still controlling the risk factor to your trading capital. Shorter time frame divergences are really good for seeing reversals to your initial position, but perhaps only when they are established in various time frames (1,2,3,5) and that might give an indication of bailing out of the position.
A typical example was in yesterday for me.
1. Entered into a long based on BLD on 30 TF, confirmed in primarily CCI and RSI was pulling in the opposite direction of the future as well, with shorter time frames macd crossovers happening in 1,2,3,5 one after another. When 30 min macd crossed I estimated for price to start shifting in the upwards direction.
2. I closed the position after spotting a BRD on 5 TF in RSI and CCI (I think).
3. When BRD on RSI 5 TF failed and turned upwards with the price I entered into another long and that's when RSI performed a third lower peak (again I am not looking @ charts right now and can not be certain whether it was RSI or CCI) and price started dropping and I knew at that time that BRD eventually has been triggered and
4. Reversed to a short as BRD (after checking 1,2,3,5) happened in all those time frames and as I stated before to me this sequence in various TF is pretty strong signal.
Hope this helps.
I must apologize. I wasn't looking for a thank you although it is much appreciated. I just noticed that it appeared like you were obtaining quite a few winners. I also know that divergences are really just one portion of your system. Will you be adding size soon or will that be farther down the road?
I am tempted to start increasing amount of lots per position right now, but I would like to take this system for another "spin" before doing so. I am currently looking at ways of automating signals via Tradestation, not necessesarily to auto trade, but to automatically identify divergences in different TFs, that way it will make my life a lot easier not having to browse the screens every second. Problem is, I am not too good with programming, but i can always pay somebody else to write the code for me I suppose. I like the system so much, that I see myself becoming a "divergence trader" (tm - B1S2)
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