Trading Divergences using Stochastic Oscillator

[mohan.sic]

I have never said the above as Divergence. I was naming it as "convergence". You came and corrected it. Later, I named it as "harmony".

That's why I wanted to assign that a name to avoid the confusion. Now, you will say your thread title is misleading.

Please go through the rules in the this post http://www.traderji.com/technical-analysis/101704-trading-divergences-using-stochastic-oscillator.html#post1153464.

Please get over the name and just concentrate on methodology here.

You are right...i think you should rename the thread as Trading Harmony with indicator. The word divergence would confuse when the concept discussed here is not about divergences.

 

[extremist]

just few cents from me....

AS TP shown above there r two types of Divergences..

one is normal divergence and second is Hidden Divergence.

Normal Divergence :

1. These type of divergences occur more frequently than other.
2. Easier to spot than Hidden divergence.
3.Imp. they always occur at reversal points.
They r always against the recent trend.

Hidden Divergence

1. Frequency of occurrence is much lesser than normal Divergence
2. Slightly complicated to spot on.
3. Imp. They occur in the direction of Trend So more reliable to trade and goal setting.

 

[mohan.sic]

just few cents from me....

AS TP shown above there r two types of Divergences..

one is normal divergence and second is Hidden Divergence.

Normal Divergence :

1. These type of divergences occur more frequently than other.
2. Easier to spot than Hidden divergence.
3.Imp. they always occur at reversal points.
They r always against the recent trend.

Hidden Divergence

1. Frequency of occurrence is much lesser than normal Divergence
2. Slightly complicated to spot on.
3. Imp. They occur in the direction of Trend So more reliable to trade and goal setting.

Perfect bro.

And Major problem with divergences is ...its a hindsight tool.
You will see a perfect divergence setup at a point and after sometime if the signal fails the divergence pattern also disappears. In fact it wont disappear but you wont feel that it is a valid divergence to trade.

It takes time to understand the concept in full.

1) Normal divergences: These are High risk trades. Here we are going opposite to primary trend and at times trends are so powerful that they don't care about any kind of divergences.

2) Hidden divergences: These are not so easy to trade as discussed in theory. At times oscillators or for that matter any indicator takes lead and they move ahead of price. In such situations we see Hidden divergence pattern on the chart but they simply fail.

 

[vagar11]

Perfect bro.

And Major problem with divergences is ...its a hindsight tool.
You will see a perfect divergence setup at a point and after sometime if the signal fails the divergence pattern also disappears. In fact it wont disappear but you wont feel that it is a valid divergence to trade.

It takes time to understand the concept in full.

1) Normal divergences: These are High risk trades. Here we are going opposite to primary trend and at times trends are so powerful that they don't care about any kind of divergences.

2) Hidden divergences: These are not so easy to trade as discussed in theory. At times oscillators or for that matter any indicator takes lead and they move ahead of price. In such situations we see Hidden divergence pattern on the chart but they simply fail.

Very good point. Looks like analyzing later is easy rather than trading with them on real time. Best thing would be let the lines crossover and then trade if it's going up.

One day I lost money in options. Then I thought of taking revenge from markets. Now, I was looking for perfect setups to buy with a highly leveraged position. Then there was a Divergence pattern forming prices going down and momentum oscillators up and I bought.

.........watching the price go up and down.....

SL got hit.

Prices eventually went up by forming a third bump in that stock.

From that day, I have decided to look for for at least 3 bumps for divergence patterns. I found that pattern again, waited for 3 bumps and worked out well for me.

 

[vagar11]

Continuation/Harmony with Nifty daily after 3 bumps. See the price fall after that.

 

[vagar11]

Divergence

Price making higher highs and oscillator making lower highs.

 

[sherbaaz]

divergence do work. and they work nicely. But its seems you are only looking at divergences in isolation ( sorry if i miss something which you have written earlier). be it regular or hidden.

divergence is coming in indicator and indicator here STS (or any other price indicator) is derivative of price. indicators are not giving value to price or moving the price. its the other way round. price moving the indicator.

secondly what indicator to use? almost all of them (here in case of oscillators) are momentum tools. they measure momentum not the trend of the price. So what divergence are your looking in indicator and price. how to gauge tht x divergence or y divergence is a good one at tht point of time when its happening without wasting energy is anticipating the future move. what is the market structure you are looking how are you seeing the background. ? you should share your thoughts on such things if you are using them as in isolation sometimes it may work some time its just does not work.

You should share details of indicator use first here its STS what is the use of STS the pros and cons. before getting into div. it may or may not be the useful tool for div. try to find out the NEW ANSWERS, which can only come from the exp you have of STS.

what you have studied in books is the knowledge but what is your wisdom, wisdom can only be the exp you have using it.

in the above chart you had shown 2 divs. Why not the one I have marked on the chart. No doubt its also in hindsight. For me at the time for formation was the best one as per mkt structure.

please share your thoughts and wisdom.

regds,s

 

[vagar11]

divergence do work. and they work nicely. But its seems you are only looking at divergences in isolation ( sorry if i miss something which you have written earlier). be it regular or hidden.

divergence is coming in indicator and indicator here STS (or any other price indicator) is derivative of price. indicators are not giving value to price or moving the price. its the other way round. price moving the indicator.

secondly what indicator to use? almost all of them (here in case of oscillators) are momentum tools. they measure momentum not the trend of the price. So what divergence are your looking in indicator and price. how to gauge tht x divergence or y divergence is a good one at tht point of time when its happening without wasting energy is anticipating the future move. what is the market structure you are looking how are you seeing the background. ? you should share your thoughts on such things if you are using them as in isolation sometimes it may work some time its just does not work.

You should share details of indicator use first here its STS what is the use of STS the pros and cons. before getting into div. it may or may not be the useful tool for div. try to find out the NEW ANSWERS, which can only come from the exp you have of STS.

what you have studied in books is the knowledge but what is your wisdom, wisdom can only be the exp you have using it.

in the above chart you had shown 2 divs. Why not the one I have marked on the chart. No doubt its also in hindsight. For me at the time for formation was the best one as per mkt structure.

please share your thoughts and wisdom.

regds,s

I tried divergence with RSI but didn't find it helpful. I didn't try any other oscillators as this was working for me. And, also I tried stochastics over periods other than 14 but didn't find it useful.

The one you have shown is perfect as there was a hammer formation too.