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I know nothing about divergence trading....and dont care to learn...but I can tell you about the EMA signals. If you do it right, almost every trade will be borderline. In other words, price is right on the edge between S and R. I dont think you or I will every be able to determine which it will do in advance. Instead, we must rely on the statistical edge and just go with it and place the stop in the correct place.
I spent a year trying to figure out how to erase the uncertainty of this very problem. Guess what, it will never be erased. So I now rely on a higher time frame to filter the trade, trade only the direction of the higher time frame trend and then use these EMA's (I use SMAs) to give me the trade signal when the chop is over.......using the higher time frame generally will prompt you to take the more likely trade.....and ignoring the tempting one but with little chance of success.
Anyway, good luck.....I know you work harder than probably anyone else on the forum......just work hard at the things that matter....not like I did, slaved away trying to eliminate losers.....it will never happen.....now I work hard at identifying the higher time frame trend, and finding entries that support that.....
Simplicity is the ultimate sophistication, Leonardo da Vinci
Most people chose unhappiness over uncertainty, Tim Ferris
Thanks Aztrader9 for your kind reminder. I spent possibly a year trying to eliminate or minimize losers. Yes, it's a vague attempt. Signals between MAs are not on my signal list yet and I don't like to be trapped lol! Now that I'm exposed to Fibs and have been experimenting with 50%-61.8% retracement levels, may incorporate the same in my system.
Just downloaded 3 e-Manuals on fibs. Will be a smart bookworm this week .. smile ..
Not that I can't resist a bargain. I spent hours trying to locate freebies serving the same purpose ooooo. I have been very selective in spending $ on brain's food and it's my first purchase in two years .. smile ..
Yes, I still continue reading informative threads and try out different indicators/systems during non-trading hours and over the weekend. I came across an interesting Easy Forex breakout system (a few indicators all color-coded) and tried to create a similar one myself. Played with it for a little while and determine to focus on the existing system instead. I am not interested in a completely new set-up and rather prefer to fine-tune the existing one. I've changed!!
Beth, you do realize the more filters you add, the fewer signals you will get, and from one of your earlier posts, you said you had no signals last week. I personally saw and traded dozens upon dozens of divergence signals. So, I think your current filters are keeping you out of many of those signals. Adding more filters will reduce the number even more. A whole week with no signals doesn't seem to corrolate with the statistics you calculated a few weeks ago. Are you trading a different setup then that used in the calculation of the statistics?
Have you looked at Felton Trading? You can probably get a good bit out of Roger's 1 week free trial. I also understand that if you say you are from BigMikeTrading forum, Roger will give you an unlimited free trial to the room. Correct me if I'm wrong, if someone knows more details about that. Roger has very good rules at determining the quality of divergence signals, like number of bars between the peaks, depth of the valley between the peaks, percent retracement of the 2nd peak, etc. These allow you to filter out many signals just by the way they look.
You may also want to think about adding a "with the trend" setup to your trading plan, because the majority of divergences tend to be against the trend. I trade 2 setups, a divergence setup, and a with the trend setup. Last week, I spent a couple of days trading just the trending setup, and it turned out that the win ratio is significantly better then my divergence setup. Although, that may also have been partially due to the couple of big down days last week. Roger also has a 'with the trend' setup he calls the 'lump trade'. I think every divergence trader should have at least 1 with the trend setup in their bag of tricks. I think that free trial might be a great resource you can use to increase your expertise with the current divergence signals you are trading now.
My trillion thanks for your suggestion. I will have Felton Trading on my exploration list.
I am using the same set-up that I used to tabulate my stats. Just that there're no divergence signals that met my rules .. sigh .. Since I turned off the counter-trend option, I am not sure if there might be some counter-trend divergence ones - likely! Based on my stats, 23% of the time no signal and 40% 1 signal.
I understand that the more filters I am using, the fewer signals I will get. I am considering Fibs (esp 50-61.8% retracement) and/or Ergodic to validate a regular signal (non-divergence and still aligns with the trend). Will see how this week evolves before my next move.
Yes, I only consider divergence signals align with the trend!! If it continues to give me Nil signal, I will consider taking the regular ones with Ergodic/Fibs as filters .. still with the trend .. smile ..
Yes, I am not fading the extremes and rather trade on predetermined retracement/pullback levels.
I love fibs...but its a deep hole....there is a fundamental truth one needs to understand about them....every price and every tick is a fib level off some other price level.....this sparks a question, which one to use......I have wrestled with this question for two years with no real answer.....but I have settled on an approximation and a filter....see the attachment. You can trade this way without the fibs or the moving average, they just help me visualize price action.....and excellent thread to read about trading the pull backs is @MWinfrey's 5min Odyssey. I personally have learned a lot from just looking at his charts and entry points....I went back and looked at them on my chart and almost all of them were a 50% or 62% pull back.....and he has been very successful with it.....
The chart I attached is a down and dirty fib on a 5 min chart. Today its a nearly perfect 62% pull back....they are not always like this....hence my notes on the chart...
Hope this helps in your thinking......
Simplicity is the ultimate sophistication, Leonardo da Vinci
Most people chose unhappiness over uncertainty, Tim Ferris