Question on Trading Divergence

[Blaiserboy]

on the 15 minute chart, price has already made a higher low. that leads me to think that the trend has changed already. You will see on my chart that the stoch 35 is rising. a sign of a bull trend...

In addition to the divergences, I like to use those stochastics... it is from a system called Bline which you can study at dacharts.com

I find that divergence is helpful, however I like to see more than divergence for my own trading

[Blaiserboy]

here is a chart that I have on my screen today showing a couple divergences

[TwosBlind]

So after another few days of experimenting with divergence, I feel like im getting closer to developing a strategy that will be consistently profitable. Ive scrapped the moving averages and started using pivot points and price action as a primary indicator with regular divergence. The results have been pretty good. Ive found that using hidden divergences alone, however, is even more reliable, especially with a TP of around 20 pips.

A couple of questions though:

What time frame do you divergence traders feel is the most reliable? Ive been using H1 and M30 for the most part, but find more divergences occur on M15. Does your time frame preference vary on whether it is hidden or regular?

Does anyone use or know where I can get a good auto pivot point indicator?

Thanks fellas

[TwosBlind]

I find that divergence is helpful, however I like to see more than divergence for my own trading

what else do you look for along with divergence if you dont mind me asking

[Blaiserboy]

This is what I use as my trading screen. I also have open on another monitor 60 min 240 min and daily

I use the 30 minute for trend along with the 15 minute.... the 5 minute for entry.

When the macd on the 15 is crossing the zero line, I look to the 5 for an entry

This is simple stuff that allows one to get in quite often in a trend.....

There is no mystique to this method, no ea's, no hokey pokey, just consistent trading of retraces....

If you want more info on this... have a look at the Bline system at dacharts.com

[decidence]

Don't mean to thread necro, but I also have a divergence question.

It seems most people say that trading divergence is dangerous if not used along with other analysis of possible trend reversal or continuation patterns.

Can someone please tell me if I am on the right track with my trading system.


Timeframe: 5 Minute
Pairs: EUR/USD, GBP/USD, USD/JPY, AUD/USD (just some pairs I've been watching but obviously divergence should work with all pairs).

Obviously I'm watching price and oscillator for divergence signals so no need to go into indicators.

Let's pretend my divergence is indicating a bullish move in price. I move to H1 TF and make sure price isn't touching or near a trend line/channel or support level. I also make sure RSI isn't > 80 already indicating that strength might already be gone. Ideally RSI is < 50 on H1 and < 20 on M5.

I enter the trade long.

I have 2 SL levels set. At -10pips I close half my position, and at -15pips I close my other half.

I have 3 TP levels. At +15pips I close half, at 25pips I close 25%, and my final 25% runs on a Trailing Stop. At +10pips I set my SL to break even.

How is this trading system?

Would you suggest different money management rules for Cable? I'm worried 10pips might be a little too restrictive although it seems with divergence that if your wrong then most likely your SL and beyond will be hit. But you still would like a little breathing room as I have seen Cable go -50pips before turning around and going +70 on a divergence signal so it's a tough call.

Using M5 chart I get a lot of divergence opportunities and so far it seems like their accuracy is quite good in the past couple weeks I have been trading but any input would be great.

[Blaiserboy]

I think that in order to get a reply that you may need to post a marked up chart so that people can relate to your situation

[vincentlim123]

For divergence. You saw the first divergence. You enter and it trigger your stoploss. It then make a new higher higher or lower lower and present another divergence opportunity. You enter and it then once again trigger your stoploss.

Your first thought would be it reach very higher or lower already. Shortly afterward, the divergence comes again. This time should be quite safe. You enter again. It for goodness sake, start move sideway and becomes consolidation before it makes another newer higher higher or lower lower.

Has my describtion sound familiar to you all. Arrggg dammn. After that, it then start moving in your desired direction. WTF....ha ha.

Anyone care to counter this scenario

[doobs]

hi vincent 123
yeah, trading divergence only against a strongly trending market is a bit risky. as others have said you really need other confirmations as well.
eg. s+r, double tops, pivots etc.
then if you also have price confermation (such as a pin bar) you should get on a lot better.

know what you mean tho- can make ya pull yer friggin hair out!!!