Jose, don’t worry, I bought and paid for your divergence kit
directly. My name is on your database, just not under any pseudonym that’s
all.
I think I’ll
keep it that way if that’s OK…after all, there’s a 007 in all
of us J
From:
Metastockusers@yahoogroups.com
[mailto:Metastockusers@yahoogroups.com]
On Behalf Of Jose Silva
Sent: Tuesday, April 26, 2005
10:04 AM
To: Metastockusers@yahoogroups.com
Subject: [Metastockusers]
Re: how to determine stoploss for divergence trading
"I own your product"
TecloGeo, I can't find your name on my clients
database.
If you are not one of my clients, and you own my
"product" as you say,
I'd dearly love to know how & when you
acquired it.
As for your particular brand of divergence, if it
happens to work
better with a couple of MA's filtering the
multiple failed signals, so
be it.
jose '-)
http://www.metastocktools.com/#contrarian
--- In Metastockusers@yahoogroups.com,
"TecloGeo" <teclogeo@xxxx>
wrote:
> Taking the gold chart you posted
first…I'm a little confused.
>
> * Weak divergence signals are a warning that
all is not well for a
> reversal.
>
> There is a strong buy signal on your daily
chart in Feb this year.
> This was the only buy signal your chart
shows. There are four sell
> signals…two were good, two were
not-so-good (although, yes,
> depending on your strategy you should at
least have been able to
> cover these with minimal, if any, loss)..
>
> So what would a couple of MAs on a weekly or
monthly chart of the
> gold price tell you about the trend?? I think
it might give you a
> little clue that the trend is UP, no??
>
> So all I'm saying is that, under these
circumstances I would place
> more weight on the buy signals than the sell.
I have attached my own
> daily chart of the entire gold bull market to
date with buy signals
> and the sell signals. I think you'll agree
that, in general, the buy
> signals are better than the sells? Do you
need any more charts from
> me before you will see that maybe my way of
going about things,
> although perhaps despicably
"traditional", certainly, in my humble
> experience, does seem to "cut it in
today's market".
>
> OK, so I might not know what is going on
inside your head, but I can
> see what you're writing down – and I'm
afraid that it seems rather
> blinkered to me. You are trying to dismiss my
method of trading as
> being incompatible with some preconceived
notion about what a
> "trending" strategy and what a
"contrarian" strategy might be. I
> personally don't give a toss for the
semantics or for the
> philosophy. Of course, there's more to my
trading that just these
> entry signals…but I'm sorry to
disappoint you. It works.
>
>>Another aspect of divergence that needs to
be taken into account is
>> the actual strength of the signals.
>
> Yes, I have tried this. I have an indicator
strength component that
> I can turn on or off. I usually leave it off
now as I found that I
> ignored too many important, but weak, signals
that way. Maybe I've
> coded it badly? I now use more fundamental
analysis coupled with
> other indicators in that repsect…I find
the extra diversity that way
> helps me retain perspective and reduces the
risk of relying on just
> the one indicator.
>
> >All divergence signals eventually fail.
>
> Are you implying that I will simply
just use a buy-and-hold on my
> own signals?!! I do also have an exit
strategy thanks.
>
>> Divergence signals may fail tomorrow,
next week, next month, or in
> six months, but they *will* eventually
fail. Market trends cannot
> continue indefinitely, any more than the
ocean tide can continue to
> rise without abating.
>
> Oh, that is a gem! Fantastic! And it's ME
that's using "tired old
> cliches" is it?!!!! I did have a good
chuckle when I read that one…
>
> And anyway…a significant number of the
buy signals on my gold chart
> haven't failed even yet!! Maybe if we wait
another 20 years they
> might? Or do you think I should have a stop
loss in place?
>
> As for the DJIA…
>
>> The reason I "handily leave
out" periods other than the current
>> one, is to avoid any possible confusion
borne out of a crowded
>> chart.
>
> Eh? Don't worry, I'm sure we can handle it!!
How about a separate
> chart for just the year 2003? You know, the
one with the strong
> trend in it…
>
> Look Jose,
I'm not trying to compete with you here. I own your
> product and I'm definitely not going to try
to sell my own version.
> Apart from the fact that I neither require
the income and feel
> reluctant to just hand it out (considering
how much time and effort
> it took me), there are probably bits of code
in there that you could
> probably argue were "borrowed" from
your good self…I think not, but
> I'd rather avoid any possible confrontation
nonetheless.
>
> So, for any interested parties out there,
please note – Jose's
> product is excellent…please buy it and
don't ask me for my code.
>
> All I'm trying to do is argue that I have a
workeable and, to my
> mind at least, proven way of trading
divergences that DOES "cut it
> in today's market". Sorry if it doesn't
gel with yours but, to use
> another tired old cliché, isn't the market
big enough for both of
> us??
>
> _____
>
> From: Metastockusers@yahoogroups.com
[mailto:
> Metastockusers@yahoogroups.com]
> On Behalf Of Jose
Silva
> Sent: Tuesday, April 26, 2005 2:51 AM
> To: Metastockusers@yahoogroups.com
> Subject: [Metastockusers]
Re: how to determine stoploss for
> divergence trading
>
>
> Let's clear up a basic misconception:
> Divergence strategies are *not* all created
equal.
> And not all application of divergence is
successful.
>
> Some divergence strategies simply don't work.
> For example:
>
> ---8<---------------
> Osc:=MACD();
> long:=Osc>Ref(Osc,-1) AND C<Ref(C,-1);
> short:=Osc<Ref(Osc,-1) AND C>Ref(C,-1);
> long-short
> ---8<---------------
>
> This basic divergence between the MACD and
price has a very poor
> success-to-failure signals ratio - too many
false signals.
>
> This is the key to good divergence signals:
the success to failure
> rate should be sufficiently high to allow
some confidence in the
> possible trades.
>
>
>> DJIA
>> But what about the period to Feb '04.you
handily leave out that
>> period with all the sell signals against
the strong up trend?
>> What does your look like then?
>
> Well, let's take a look at it, shall we?
> http://www.metastocktools.com/MACDH/Dow2004.png
>
> The reason I "handily leave out"
periods other than the current one,
> is to avoid any possible confusion borne out
of a crowded chart.
>
>
>> What about now? The last divergence
signal was a buy.You taking it
>>?? I'm not..I need more evidence before I
go long again in this
>> market.
>
> TecloGeo, in case you have not picked this
up, that last MACDH
> Divergence signal on the Dow was a minor
one. It correctly signaled
> a break or pause in the downtrend, followed
by a quick short-term
> rally.
> Depending on your own trading style and exit
strategy, this may have
> been a very good trade indeed.
>
> All divergence signals eventually fail.
> Market conditions change with time, and
nothing is set in stone.
> Divergence signals may fail tomorrow, next
week, next month, or in
> six months, but they *will* eventually
fail. Market trends cannot
> continue indefinitely, any more than the
ocean tide can continue to
> rise without abating.
>
> Another aspect of divergence that needs to be
taken into account is
> the actual strength of the signals.
> Take a look at the poor relative strength
(yellow indicator) of the
> divergence signals on the Gold chart for late
last year:
> http://www.metastocktools.com/MACDH/Gold.png
> Weak divergence signals are a warning that
all is not well for a
> reversal.
>
>
>> A "good trend indicator" might
simply be a couple of MA's.
>
> My experience differs. The
"traditional" use of T/A based on 60's
> myth just doesn't cut it in today's
markets. A successful trader
> today needs sharp trading tools - divergence
and trend-following
> simply do not mix.
>
>
>> Picking MAJOR tops/bottoms is a mugs
game.
>
> I would say that repeating the same old tired
T/A cliches is a mug's
> game. ;)
>
>
>> because, with respect, you are only
thinking one-dimensionally.
>
> With respect, I doubt very much that you have
the smallest inkling
> of what is inside my head.
>
> Basing trading strategies on the same old
tired application of
> indicators (and looking at different
time-frames of the same
> information), doesn't even begin to approach
lateral nor
> 2-dimensional thinking.
>
> One way of thinking outside the square in
T/A, is looking at the
> factors and fundamental conditions that
affect the markets, and
> applying this information wisely to help
shape timely entries and
> exits.
> But this is another subject. ;)
>
>
> jose '-)
> http://www.metastocktools.com/#contrarian
>
>
>
> --- In Metastockusers@yahoogroups.com,
"TecloGeo" <teclogeo@xxxx>
> wrote:
>
> That's why I say to mix the time frames..you
can get perfectly good
> divergence buy signals on the way up a
higher-order up trend.
> Corrections 'fizzle out', diverge and then
turn around just the same
> way as primary turning points.it's just a
question of what
> scale/time-frame you are referring to.
>
> Of course you will get good divergence
signals at the tops and
> bottoms. I've attached a chart of my own to
show that I too can come
> up with nice buy and sell signals for the
DJIA when it's stuck in a
> trading range. But what about
> the period to Feb '04.you handily leave out
that period with all the
> sell signals against the strong up trend?
What does your look like
> then? Probably better than mine.most likely
similar though. What
> about now? The last divergence signal was a
buy.You taking it?? I'm
> not..I need more evidence before I go long
again in this market.
>
> Trouble is, with mine and yours, and any
other divergence
> indicator/system out there that you will get
a whole shed load of
> terrible signals if you try and use it
against a strong trend. You
> might end up with a very timely signal at the
top or bottom, but how
> many times did it screw you on the way
there??
>
> A "good trend indicator" might
simply be a couple of MA's. I use a
> custom indicator based on simple pivot
support/resistance levels.
> They're both pretty simple tools. A few MAs
on a weekly chart of the
> DJIA would have told you that you were in a
strong up trend through
> most of 2003 (as did the predominant blue
colour on my chart), so
> ignore the sell signals. OK, so I missed the
top in Feb 2004 doing
> that.So what? The same indicators should have
told you (as the
> mixture of blue, grey and red did on my
chart) that the following
> period was a choppy/whipsaw kind of trend and
so you might have
> taken the few good trades there. Well done
both of us at that time.
>
> Picking MAJOR tops/bottoms is a mugs game.
Divergence is tradeable
> if you know how the market is behaving on a
bigger time frame.
>
> Now look at the 60 minute chart. I've
attached exactly the same
> expert as on the daily one, so I'm not
cheating. See the two great
> sell signals at the end of March/start
April?? Notice how they
> occurred when the trend colour on the DAILY
chart had a nice bias
> towards being RED (i.e. down). Notice how
crap most of the buy
> signals are??!!!
>
> I would say that mixing trending and
contrarian strategies worked
> pretty well there, wouldn't you? It's not a
fluke. I can send more
> examples if you really want me to. It might
not make intuitive sense
> to you but that's because, with respect, you
are only thinking
> one-dimensionally.
>
> _____
>
> From: Metastockusers@yahoogroups.com
[mailto:
> Metastockusers@yahoogroups.com]
> On Behalf Of Jose
Silva
> Sent: Monday, April 25, 2005 3:26 PM
> To: Metastockusers@yahoogroups.com
> Subject: [Metastockusers]
Re: how to determine stoploss for
> divergence trading
>
> "Regarding divergence trading, first and
foremost
> you need to have a good trend
indicator."
>
> A good trend indicator... easier said than
done. ;)
> My experience is that divergence and any form
of trend-following/
> filtering don't mix too well.
>
> Take a look at these divergence signals:
>
> http://www.metastocktools.com/#contrarian
>
> ... and show me a trend filter that would not
take out those great
> top & bottom divergence signals.
>
> By definition, a trend indicator is a
crowd-following lagging
> filter, even within shorter
time-frames. In contrast, divergence
> signals are contrarian (anti-trend).
The two strategies hardly mix
> at all.
>
> A better filter for divergence signals would
be something based on
> non-lagging price patterns. Kevin's
definition of a failed
> divergence signal fits well with
pattern-based filters.
>
>
> jose '-)
> http://www.metastocktools.com
>
>
>
> --- In Metastockusers@yahoogroups.com,
"TecloGeo" <teclogeo@xxxx>
> wrote:
> Regarding divergence trading, first and
foremost you need to have a
> good trend indicator. The downfall of using
divergences is that you
> try to "pick the top" too early.for
example, a strong trend will
> have your divergence sell indicator firing
pretty much all the way
> from the bottom to the top.
> Not much use.but if you can identify the
trend well enough then take
> divergence signals in the corrections you
might be on to something.
>
> Think about using different time frames..for
example, identifying the
> longer term trend on a daily/60 minute chart
and then taking
> buy/sell divergence signals on a shorter-term
chart (e.g. 12-minute)
> in the direction of the longer-term trend-.
Use a delayed entry
> signal above the last resistance pivot for an
buy entry to try to
> ensure the price actually starts moving in
your direction after the
> signal and then put your stop, as Kevin says,
under
> the last pivot support - i.e. the low where
the divergence buy
> signal was given. The risk is therefore the
difference in the pivot
> levels, plus whatever 'room' you want to
give.
>
> I would recommend Clayburg's book "Four
Steps to Trading Success" as
> a good reference on this style of trading.
I've found his methods to
> work quite well in real-life trading. He
covers his own style of
> divergence-type signals, entries, exits and a
method for determining
> trend (which I've never personally used, but
is interesting
> nonetheless).
>
> _____
>
> From: Metastockusers@yahoogroups.com
[mailto:
> Metastockusers@yahoogroups.com]
> On Behalf Of Kevin Barry
> Sent: Monday, April 25, 2005 12:12 PM
> To: Metastockusers@yahoogroups.com
> Subject: Re: [Metastockusers]
how to determine stoploss for
> divergence trading
>
> Doc,
>
> I would suggest that the logical place for
the initial stop loss is
> one tick below the low of the price bar (for
a long trade) at which
> the divergence occurred. By definition, if
that low is broken, the
> divergence signal has failed and you should
be out of the trade
> immediately. Once the trade moves in your
favour, you can then
> introduce your trailing stop or whatever.
>
> Regards,
> Kevin
>
> At 17:12 24/04/2005 -0500, you wrote:
>
> hi all,
> as we kow divergence trading is in a
contrarian nature. so we cannot
> use trailing or other kind of stoploss when
we are taking the
> position.
>
> are there any divergence traders around or
anybody who has any idea
> o this subject?
>
> thanks
>
> --
> Dr. Torque
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