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Mike,
Excellant comments..if only I understood what your
talking about..lol! btw - the Online Trading Expo was
very interesting.
John
--- mike ball <thinkpad600e@xxxxxxxxx> wrote:
> on Divergence and Reverse Divergence...
>
> There are many metrics within which to consider when
>
> trading this setup in real time. Yes, as many have
> pointed out it is not an easy task to recognize
> validity of these.
>
> However, to those that have simply dismissed them as
> useless, I most definitely can raise my hand as one
> that is in opposition to your opinion.
>
> I don't discount the validity of your research
> methodology as I have no way of discerning the
> appropriateness or usefulness of the
> "number-crunching" that I'm sure you've done.
>
> The realizations that trading the markets intraday
> as I'm sure most on this list will agree is that No
> ONE indicator alone seems to get the job done.
> However, a "very good" indicator with a few "other"
> parameters defined by filters or secondary
> indicators
> validating the primary can be a trading weapon of
> considerable validity and repetitive usefulness.
>
> A very powerful setup that I use on a daily basis
> and
> is quite pronoucned at least a couple of times
> throughout the trading day is the concept of reverse
> divergence in a HRTBC(Higher Reference Tick Bar
> Chart)
>
> Most precisely validated by the dynamics that are
> occuring in lowest reference Tick bar chart I view
> to
> take my entries from.(100TB)
>
> Whereas to say that a trader may be considering the
> 200TB chart as the HRTBC and waiting for a
> resumption
> in trend(up), finds that price nose dives
> creating the onset of what looks to be the initial
> forming of Rev. Dvg. in your Stoch/RSI indicator(s)
> accompanying "Filters"; High Tick Vol., potential
> piercing the 3rd std. dev. on the BBs with acute
> force
> directly into a "significant" 2B and/or Trendline,
> price congestion level take your pick, only to be
> met
> with instantenouse reversal bars
> or extremely evident "market hesistation" never
> allowing the primary moving average of the HRTBC to
> be violated, could perhaps deduce that a resumption
> in
> trend could likely be in the making.
>
> Codifying a Divergence Engine correctly or
> appropriately within a given market may be something
> that is of on-going neccessity and perhaps not worth
> the maintainence costs involved if the given market
> from which the attempts at the recognition of
> divergences are ultimately producing trades that are
> statistically ending in very little derived point
> value. A.K.A. the trade isn't giving you enough Bang
> for your Buck.
>
> However, what I find as quite useful in my daily
> trials and tribulations at trading this particular
> setup of mine is simply this.
>
> If in fact the reverse divergence signals that I'm
> playing off of fails. Then what I do expect from
> market and happens quite often enough to extract the
> realization of profits is that the market WILL go
> the
> other way, once the divergence is "taken out"
>
> Some might say that an indicator that is Overbought
> or
> Oversold stays Overbought or Oversold. Yes, that is
> true is some cases, and in those that it is Not...
>
> Well there you have my setup.
>
>
> cheers-
>
>
> mike ball
>
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> --- DH <catapult@xxxxxxxxxxxxxxxxxx> wrote:
> > > However the
> > > one type of divergence that seems to have some
> > predictive value is
> > > intermarket divergences.
> > <snip>
> > > I found it was much more difficult to implement
> > > real time than in hindsight
> >
> > Bingo! As Mark correctly points out, even in
> John's
> > cherry-picked
> > charts, he conveniently ignores several turns of
> the
> > McOsc and draws his
> > trend lines on the "real" turns. The eye is very
> > good at recognizing
> > these patterns after the fact (too late to trade)
> > but we don't have that
> > luxury when trading the right-hand edge of the
> > chart. There are too many
> > fake-outs realtime to make it a very useful tool.
> >
> > And yeah, been there, done that, lost money, got
> the
> > "I survived"
> > t-shirt, moved on.
> >
> > "If it works, code it and prove it."
> > (Paraphrase of the philosophy of my friend and my
> > first mentor, Mark
> > Brown. I forgive him for accusing me a being a
> > closet astrologer. :-)
> >
> > --
> > Dennis
> >
>
=====
John Armstrong - Business Development Mngr.
Redwood Trading LLc
160 Pine Street, Ste# 720
San Francisco, CA 94111
ph#: 415-946-3180 cell#: 831-818-9572
markets@xxxxxxxxxxxxxxxxxx
http://www.redwoodtrading.com
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