Good thread.

I have been working on something similar. The research looks promising, but when it comes to actual trading, the results are not that great

I was wondering if Tiger or anyone else could shed some light on what the problem maybe?

Chart Setup:
plot 1 - ES 5 min
plot 2 - 4 period moving average of 3 min $TICK

*Plot 1 also has the same 4 period sma.
*$TICK(NYSE TICK) chart is hidden not shown.

This morning at 10:55 AM EST. I correctly identified a negative divergence between price(ES) and TICK moving average.
After putting in a high, when ES rallied back up towards 1226, TICK ma failed to confirm the move.(see the purple arrow).

Given the above, how would you have traded the ES?

I think I am having trouble with this since the analysis is based on something other than price. This divergence can last a while, can also show up early as was the case with the second 'signal' at the bottom.

Thanks

But, this looks pretty textbook to me. Lower high with $TICK confirmation -worked nicely. Probably had confirmation from other sources, also.

So, I'm not sure what the question is.

Thanks for your reply.

I am essentially a 100% mechanical systems trader, so having trouble coming up with a fixed Entry rule set.

I think of TICK divergance as a mkt bias, even that is a grey area for me, since it can last a while, with no clear-cut start or end....

so this is from later today. A did not work out, but B did.

so I shamelessly copied your format from yesterday!

1 min ES chart, w/ 1 min $TICK(hidden)

21 period sma on $TICK

Although not trading TICK divergence yet. All three setups looked good today. There appears to be a need to use wide stops and give the mkt room for the trade to play out.

tigertrade, what trades would you have taken today? Thanks