What do you mean by untouched? Anyways, this is what happened on Fri on a 60 min chart (pic below). Again this is trading against the trend but you can take trades like these only if you know what to look for.
Is anyone using Divergence successfully?
- Thread starter MarketAddict
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What do you mean by untouched? Anyways, this is what happened on Fri on a 60 min chart (pic below). Again this is trading against the trend but you can take trades like these only if you know what to look for.
Divergence is NOT a trade entry signal regardless what indicator you may be using. Therefore, what's your trade signal you're using to tell you to open a trade when you see a divergence price action. ?
I ask the above question because you specifically said you've manually backtested RSI for divergence. That implies you must be using a trade signal involving the price action or the indicator itself to tell you when to enter the divergence. Simply, you can not backtest divergence without a trade signal.
Another way to look at it, if you meet someone that say divergence doesn't work or divergence does work without discussing what trade signal they were using when divergence didn't work or did work...he/she probability knows very little about divergence.
Last of all, if you go to ForexFactory.com forum, there was an old thread there were traders discuss about 100 different types of trade signals to use to signal to open a trade after you've identified a price action in divergence via whatever indicator you're using...
Many trade signals discussed involved something that needs to occur with the indicator and other trade signals involve the price action itself after the divergence was identified. May be worth your time to look for that old thread at the forum if your seriously interested in backtesting different trade signals to use with your indicator/price divergence price action.
What's Pre-divergence?
The trade signal is a red bar if price is going up, and a green bar if price is going down.
Yes I do agree with you that something needs to occur with the indicator. That's why you can't take these type of trades blindly. You have to be able to read price action.
That is a divergence, I would draw the trendline on price along the tops of the price bars personally but I have not given that much thought to it.. That is also backtestable... I have some code that alerts me to divergences and draws the trendlines for me. It's hard to watch everything so I have the computer doing the boring part and alerting me when there is something I should see...
Codes that alerts you and draw the trendlines? I need that
The old timers around here are in so many words throwing up danger signs. They are fairly clever to not come right out and say "you're going to lose hard doing this" because:
A. One can't be certain of this.
B. You'll get 20 knuckleheads show up saying how well divergences work and how they are minting money (they will likely be broke or using a different method within a year or two).
At any rate carry on, the school of hard knocks is one way to learn.
A. One can't be certain of this.
B. You'll get 20 knuckleheads show up saying how well divergences work and how they are minting money (they will likely be broke or using a different method within a year or two).
At any rate carry on, the school of hard knocks is one way to learn.
I think that is when the divergence comes early from being too excited.
