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James inLA wrote:
>
> In a message dated 98-01-06 08:46:06 EST, you write:
>
> << I need some help in putting together a trading system. I am looking for
> a divergent indicator that would be used to confirm a trading signal. I
> am using 3 moving averages, CCI channel crossover, Keltner Bands. I am
> presently using the Ultimate Osc as an indicator. >>
>
> I think I'm right in saying that divergence is hard to code. Probably because
> it's something of a subjective thing. Am I right about this, people? If not,
> I would love to find out how this could be accomplished.
>
> Jim
Jim...
I have experimented with the idea of coding divergence between rsi and
price. Unfortunately what I found was what you are suggesting: it seemed
that it was a "subjective thing". Either that or I have deluded myself
into thinking that divergences really do work because of the way they
sometimes appear on the chart. I guessed that it was a case of picking
out what works on the chart and "overlooking" when it didn't. IOW I find
cases of divergence on current charts and see it work over and over but
what I'm not seeing is the many times it doesn't work. I've even heard
of traders fading divergences! After alot of testing I found no edge in
a system that trades these divergences. I know that a divergence is said
to be "the strongest signal" but my thorough(I do mean thorough)
backtesting showed no edge. Go figure... I will admit that I may be
missing something on this and would be happy to hear of someone who's
made divergences work in a system.
Best... John
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