SFX Divergent Daily Advice

[bobnat]

Originally Posted by Atomised

SFX u say price always comes back to the divergence price, what makes u so sure of this, have u backtested this or what ?

No, it doesn't. It's a mean regression approach that works most of the time, but when it fails, and you're used to it working for the last month, 6 months, etc, you're going to get burned.

You can't blindly expect divergence to always work. Fibs, EW, you name it, nothing works all the time. If there was something that did, don't you think someone would have found it by now. And if they had, they would have control of the markets because they would be able to bet the house everytime that thing or event occured and win huge amounts of money. Be a bit more critical in your thinking, it'll save you some money.

Nat

[Atomised]

Originally Posted by bobnat

No, it doesn't. It's a mean regression approach that works most of the time, but when it fails, and you're used to it working for the last month, 6 months, etc, you're going to get burned.

You can't blindly expect divergence to always work. Fibs, EW, you name it, nothing works all the time. If there was something that did, don't you think someone would have found it by now. And if they had, they would have control of the markets because they would be able to bet the house everytime that thing or event occured and win huge amounts of money. Be a bit more critical in your thinking, it'll save you some money.

Nat

Thanks bob, wasn't just relying on divergence anyway was also looking for other things like support and resistance, what you'd call a few signals all pointing to the one thing !

Kenari

Here's a couple of Yen charts for u, as before the white lines show regular divergence and the 4 hr chart there's hidden divergence which confirms the trend is down ! Hope all these charts help ?

[SoundFX]

Well, for a given time frame, I've yet to see it fail. As I stated, its a matter of when. Of course, when trading a higher time frame, this can lead you hundreds of pips from entry. That's why I'm partial to lower time frames, as the results don't require as much pain. I understand that my statement sounds a bit naive and un"critical", yet my approach entails managing the trade in a way that doesn't require me to need to see the full counter-move before profiting. But you are absolutely correct in that nothing works 100% of the time. Except collecting the spread. :-)

Originally Posted by bobnat

No, it doesn't. It's a mean regression approach that works most of the time, but when it fails, and you're used to it working for the last month, 6 months, etc, you're going to get burned.

You can't blindly expect divergence to always work. Fibs, EW, you name it, nothing works all the time. If there was something that did, don't you think someone would have found it by now. And if they had, they would have control of the markets because they would be able to bet the house everytime that thing or event occured and win huge amounts of money. Be a bit more critical in your thinking, it'll save you some money.

Nat

[lamode]

bobnat - i have pmed you

[SoundFX]

Atomized, just looked at your charts. We must have a different view of which divergence is the "right" divergence. For example, in your post on the previous page, I would not have traded that, as the peaks were too close and a little insignificant for me. If I'm looking at a time frame like 30M, I want to see something signifivant, perhaps spikes with divergence, or large troughs. Its very subjective, but takes time.

As for my statement that Bob contended, its simply my observation from years of chart watching, and I'm absolutely convinced that it is 100% true or I wouldn't trade the way I do. Without conviction, one is less apt to do the right thing, out of uncertainty and self-doubt. On your hourly chart, for example, the point of divergence is around 8880 for Cable. I will say absolutely that you can go long Cable right now and be assured of getting up to at least 8880. Will that happen today? Probably not, but perhaps tomorrow or next week. Its a waiting game and a money management game. At least that's how I like to play it.

[midozfx]

Originally Posted by SoundFX

But you are absolutely correct in that nothing works 100% of the time. Except collecting the spread. :-)

LOL yes this is the only thing that works 100%

[SoundFX]

USD/JPY looks an excellent short. Still holding myshort from before. Won't add any though until a trend break. Sometimes the yen crosses get away from you.

[bobnat]

Sound, I wasn't criticizing you in any way or form. I've been following all of your posts and I enjoy reading them. I think divergence is a great tool and I'm very impressed with how you use it. More importanly, the way you learned how to position size correctly, after that wonderfully exciting roller-coaster ride you took a while back, is even more impressive.

Nat