How to trade divergence ? and where to put stops?

[mohan.sic]

Dear Capricorn,

Can you provide me with an afl to scan divergence between price and rsi (14)

 

[Capricorn]

I don't do AFL's but here's something from from a friend. I don't know if it works . Check it out.

// RSI Divergence - Plot and Explore

_SECTION_BEGIN("RSI divergence");

P = Param("Period RSI", 14, 9, 14, 1);
VRSI = RSI(P);

Length = 100;
Lapse = 3;

fUp = VRSI > Ref(VRSI, -1) & VRSI > Ref(VRSI, 1) & VRSI >55;
fDown = VRSI < Ref(VRSI, -1) & VRSI < Ref(VRSI, 1) & VRSI < 45;

Div = 0;

for(i = Length; i < BarCount; i++)
{

// Down
if(fUp)
{
k = i-1;
do
{
if(VRSI[k] > VRSI & fUp & fUp[k])
{
if(C[k] < C & i-k > Lapse)
{
Div = 1;
}
k = i-Length;
}
else
k = k-1;
} while( k > i-Length );
}

////////////////////////////

// Up

if(fDown)
{
k = i-1;
do
{
if(VRSI[k] < VRSI & fDown & fDown[k])
{
if(C[k] > C & i-k > Lapse)
{
Div = -1;
}
k = i-Length;
}
else
k = k-1;
} while( k > i-Length );
}

}



Fon = IIf(Div == 0, 0, 1);

Col = IIf(Div == 1, 4, IIf(Div == -1, 5, 1));

Color = IIf(Div == 1, 32, IIf(Div == -1, 27, 1));

Color = IIf(fUp == 1, 32, IIf(fDown == 1, 27, 1));

Div = IIf(Div == 0, Null, abs(Div));
Fon = abs(Div);


// Title = EncodeColor(4)+"RSI(" + WriteVal(P, 2.0) + ")" + EncodeColor(1) + " ="+WriteVal(RSI(P));
// Plot( RSI(P), "RSI", Col, 5);
// Plot( 25,"", 4, 16+4096);
// Plot( 75,"", 4, 16+4096);
Plot(Fon, "", Color, 16384+32768+4096 | styleOwnScale, MinValue = 0, MaxValue = 1);
_SECTION_END();

Filter=Fon==1;
AddColumn
(C,"Close",1.2,Color);

If you are willing to pay for it go here.

http://www.aflwriting.com/

 

[mohan.sic]

Dear Capricorn,

Thank you very much but it dint work.

 

[mohan.sic]

Hi Capricorn,

Sorry for my previous post. I think its working. I plotted it as an indicator on chart window
and its showing Green Bar and Red Bar . But how to use this for scan purpose.

 

[mohan.sic]

I mean the buy/ sell variables are not not defined in the divergence.

 

[mohan.sic]

Dear capricorn,

Can u please add buy / sell condition to the above afl for scanning purpose and post it entirely. That would be great effort from your end.

Regards, MoHaN.

 

[zunayed]

Hi Mohan.sic,
please add the below two line at the end of the code.

Buy = Col > 4.50 AND fon == 1 AND Ref(RSI(14),-1) < 35;
Sell = Col < 4.50 AND Fon == 1 AND Ref(RSI(14),-1) > 65;

 

[sarker]

Hi Mohan.sic,
please add the below two line at the end of the code.

Buy = Col > 4.50 AND fon == 1 AND Ref(RSI(14),-1) < 35;
Sell = Col < 4.50 AND Fon == 1 AND Ref(RSI(14),-1) > 65;

Brother I will check it

 

[yogesh-tiwari]

I read a book "Come into my trading room".

Divergence Excerpt:

Whenever you see divergence, and price confirms by closing above the high of last candle get into trade with a stop just below the recent pivot low.

Now, the point worth noting here is..if the divergence fails and price falls back..take the opposite trade at the stop. As quoted in the book..whenever price fails a divergence, it causes "Hounds of Baskerville" to blow, whereby leading continuation of previous trend.

Rest...test and assure self.

 

[mohan.sic]

Dear Zunayed,

The Buy/ sell condition for RSI divergence afl which you have given are not working.
If its working with you, please post the entire code.

Thank you, MoHaN.