This just occured to me while staring at the ceiling.
When the market is rallying (Long or Short) and the regular divergence just wont work ~ you keep getting stopped out, just take hidden divergence trades only as they come up. They are usually with the main trend :clap:
The ceiling could do with a lick of paint me thinks......
Agree and Disagree Nick. IF you take divergence off the larger t/f and don't see it on your trigger t/f I have found you can get boned. However, I have also found that if you use multiple T/F's the risk of this happening is a little smaller. I look for divergence to occur across all 3 t/f's before I enter a trade against the trend and will exit at the first sign of hidden divergence.
Generally once all 3 t/f start to diverge you may get another pop up/down but you should grab some nice points out of it. I should also add that stops are kept extremely tight. Just below/above relative high on 30 tick chart. On Ftse this is no more that 5 points (MAX)
With regards to support and resistance, I don't look at that either. IF I see a setup I take it regardless of trendlines, Support, Resistance, Pivots etc etc.
I like to keep the execution as simple as possible. The only thing I look at is the divergence (strength of). I look at NOTHING ELSE. So my way of squaring this circle is that if I just concentrate my attention on Divergance and keep an eye on the 30tick to nail the entry that should keep me one step ahead. I have avoided taking positions because of S&R etc etc and to my shock/horror the bugger has paid out. There have been a few that haven't and I would have lost money on. However, it seems that the majority taken around these levels have given me my points target or a break even trade.
I look at a break even trade as a free opportunity to make money.
The only levels I keep my eye on are the price levels for my divergence setup. I think it is important to highlight the point IF TRADING AGAINST THE LARGER TREND KEEP AN EYE ON HIDDEN DIVERGENCE. I have been caught and taken out for flat a good few times where I have tried to hold on for a couple more points against raging hidden divergence. I find that with the hidden divergance you can get a nasty spike move against you. These moves develop much FASTER than regular divergance moves IMO.
Furthermore just because the trend on YOUR highest timeframe is up that doesn't mean the trend is up. You should always keep an eye for hidden divergence on the highest t/f that way you're putting the odds in your favour of staying out of trouble.
Lastly before anyone falls asleep ! I find this is ALL about the screen time and practice and obviously about the application of logic. The more screen time you get the better you will become at spotting setups. When I first started looking at this I found it particuarly tricky. I would always get caught out by the levels especially on Hidden Divergence (Ask Brutusdog
) Hit a hidden divergence when the high/low had broken and end up getting boned.
I agree with Nick that the best place to start to learn about divergence is BABY PIPS. IT explains all with examples VERY SIMPLY. Like anything HARD WORK and extreme determination plus some losses ! are required to master these setups. But once you do (and I am no way near a master yet) you will feel really comfortable with trading them and feel one step ahead of the market.
One last thing...don't get caught up on indicator settings and time frames. One man's meat is another man's poison. THEY ALL WORK....Yes they do. There are no "optimum" or "holy grail" settings. The optimum settings will be DOES THIS WORK FOR ME ? If you answer YES..then you have found YOUR HOLY GRAIL setup. Spend more time looking for and practising with divergence than twatting around with indicators and t/f. Trust me from someone who wasted a great deal of time searching for the HOLY GRAIL indicator !! You will progress MUCH FASTER !
