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  #134 (permalink)

Bala, PA, USA
Trading Experience: Intermediate
Platform: NinjaTrader
Broker/Data: Mirus, IB
Favorite Futures: SPY, Oil, Euro
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Posts: 1,858 since Jul 2010
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bluemele View Post
Well, if your divergence estimate is completely mechanical and leaves no interpretation for 'calculation' or evaluation, then yes, this in my book is a very good mechanical system.

But, is your evaluation of divergence mechanical or is it discretionary?

Just curious and off subject.

Yes the entry is also mechanical. It is defined with multiple steps of criteria that has to be met, but given that I only trade that setup (actually I trade 2 setups) I am so familiar with the setup that all those steps have now gelled into a 'picture' for me, that I can recognize instantly, and actually recognize as the setup or picture is forming, before it fully completes. Divergence generally announces itself multiple bars in advance. I will generally know I am probably going to get a signal several bars in advance, and on the trigger bar, I know exactly where my entry is going to be.

This is why I advise people not to trade 7 different setups, or continually analyze charts to see what patterns pops out at you. Just trade 1 or 2 setups, and know them inside and out. All you are doing when you are looking at a chart, is looking for that pattern, period. Be a stalker of these specific patterns, don't look for random patterns as targets of opportunity, they require to much effort in the heat of battle. This cuts down on the continual decision process you have go through for every type of trade, for each and every trade, thereby reducing the psychological effects of each trade. In general, I believe the less thinking you have to do while you are trading, the better. Do all your thinking before/after market, and build all that thinking into the method itself.

Last edited by monpere; July 20th, 2011 at 06:20 PM.
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