MACD Divergence

[asha99]

Does anyone trade divergence on Forex? I have been struggling with this,
just how do you trade the divergence pattern?
I spot so many, but am confused how to trade, as when to take the trade.
when it works it is worth hundreds of pips, but also have many losing trades

 

[gkpc]

I do not trade Forex, but the following found on the Net may be of some use :

MACD Histogram Divergence
This explorer looks for stocks exhibiting extreme divergence from the MACD Histogram. In his book "Trading for a Living", Alexander Elder argues that divergence from the MACD Histogram gives the strongest signals in the whole of technical analysis.

ColA:

md := MACD();

mdhist := md - Mov(md,9,E);

Correl(((Sum(Cum(1)*( mdhist ),100))-(Sum(Cum(1),100)*

Sum(( mdhist ),100)/100))/((Sum(Power(Cum(1),2),100))-

(Power(Sum(Cum(1),100),2)/100)),((Sum(Cum(1)*C,100))-(Sum(Cum(1),100)*

Sum(C,100)/100))/((Sum(Power(Cum(1),2),100))-(Power(Sum(Cum(1),100),2)/100)

),12,0)

Filter Column:

colA and colA <-0.8

The above formula can also be combined with a volatility buy signal and a volume signal. The following addition is then made.

ColB: The volatility buy signal

H > Ref(C,-1) + 1.8 * Ref( ATR(10),-1)

ColC: Volume 10% above the average of the previous 10 days

V > 1.1 * Ref( Mov(V,10,E),-1)

Filter Column:

colA AND colB AND colC AND colA <-0.80

Initial tests with this system have been encouraging.

 

[Slipknot1029]

You really don't trade MACD Divergance. It is only a setup condition. You still need a system for entry, risk control, position sizing and exit.
MACD divergance simply means that the newer price extreme was made with less strength than the last. It may mean a reversal or it may not. It only means the trend is weaker at the moment.

 

[columbus]

You really don't trade MACD Divergance. It is only a setup condition. You still need a system for entry, risk control, position sizing and exit.
MACD divergance simply means that the newer price extreme was made with less strength than the last. It may mean a reversal or it may not. It only means the trend is weaker at the moment.

Yes,entry / exit are very impotant .I think MACD / MACDhistogram are good tools for identifying the reversals.

 

[AW10]

Does anyone trade divergence on Forex? I have been struggling with this,
just how do you trade the divergence pattern?
I spot so many, but am confused how to trade, as when to take the trade.
when it works it is worth hundreds of pips, but also have many losing trades

If your aim is to trade consistently, then do not put money on 1 or 2 indicators.
Define, your entry conditions, exit condition, stoploss rule first.
Then Please please, backtest them and see if these rules really give u positive result over a period of time. There will be losing trades.. but if you get 40 to 50 trades on historical data and the outcome is positive then it is worth putting the money.
If these rules have not made money in the past, what is the gurantee that it is going to make money now.
Else, it is just gambling and will not give consistency to your performance and after few loosing trades, will start searching for next indicator aka holy grail.

Happy Trading.

 

[alaa aly]

MACD Explorer

The explorer, than the average of 9 days of MACD is used to find the direction of stocks. MACD is used Explorer, especially for medium-term trend in the direction of producing signals indicative periods. In terms of compression and horizontal motion, changing direction frequently, such as many indicators.
Buy Signal:
Filter: Cross (MACD (), Mov (MACD (), 9, Exponential))
HOLD signal:
Filter: When (MACD ()> Mov (MACD (), 9, Exponential)) AND When (Ref (MACD (), -1)> Ref (Mov (MACD (), 9, Exponential), -1))
SELL Signal:
Filter: Cross (Mov (MACD (), 9, Exponential), MACD ()) ALMA Signal:
Filter: When (MACD () <Mov (MACD (), 9, Exponential)) AND When (Ref (MACD (), -1) <Ref (Mov (MACD (), 9, Exponential), -1))

 

[kingfisher3210]

If your aim is to trade consistently, then do not put money on 1 or 2 indicators.
Define, your entry conditions, exit condition, stoploss rule first.
Then Please please, backtest them and see if these rules really give u positive result over a period of time. There will be losing trades.. but if you get 40 to 50 trades on historical data and the outcome is positive then it is worth putting the money.
If these rules have not made money in the past, what is the gurantee that it is going to make money now.
Else, it is just gambling and will not give consistency to your performance and after few loosing trades, will start searching for next indicator aka holy grail.

Happy Trading.

Well said...truth of trading which new traders understand after wiping out the first account.

 

[meet_debabrata]

can anyone please let me know rsi divergence formulae in metastock eod??

 

[K Gadkari]

Need afl to detect MACD divergence. When Close of Price is higher than previous and MACD value is lower in last 26 bars it should show on chart
or should come in Exploration.
Same for RSI . When Close of Price is higher than previous Close and RSI value is lower in last 14 bars it should show on chart or should
come in Exploration. Also for RSI if previous RSI is above 70 and next in 14 bars if RSI is below 70 and price close is higher it should
come in Exploration.
Thanks
God Bless You