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RSI or STO or MACD for Spotting Divergences?
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RSI or STO or MACD for Spotting Divergences?

  #1 (permalink)
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RSI or STO or MACD for Spotting Divergences?

Hi there,

I've read in several places on this forum that using RSI is a better way to trade divergences. As I am selecting my initial tools to refine my strategy, I was curious of any opinions on which type of divergence would work best in the case of a a Double Top on ES or NQ for example. I have been using STO, but was curious about RSI which is another bounded indicator.

I have been using a Trial of RJAY's divergence indicator, and it appears to be using RSI- but I'm waiting to hear feedback from him on it. I'd also be willing to take recommendations on any other Divergence Spotters. (I will check out ECiDiv shortly)- however I didn't see any others recommended.

Thanks in advance!


Thanks

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  #3 (permalink)
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dBassFour View Post
Hi there,

I've read in several places on this forum that using RSI is a better way to trade divergences. As I am selecting my initial tools to refine my strategy, I was curious of any opinions on which type of divergence would work best in the case of a a Double Top on ES or NQ for example. I have been using STO, but was curious about RSI which is another bounded indicator.

I have been using a Trial of RJAY's divergence indicator, and it appears to be using RSI- but I'm waiting to hear feedback from him on it. I'd also be willing to take recommendations on any other Divergence Spotters. (I will check out ECiDiv shortly)- however I didn't see any others recommended.

Thanks in advance!


Thanks

Honestly I say forgot these things, these OHLC derivatives and use market internals. ADD, TICK, NY NET VOL, VIX etc

Get to know the market in general. How it behaves on diff types of days. What does the TICK do as ES breaks the day low, as it pokes out below the IBL? Does it make a higher low? What does it mean how can you trade it?

You will gain a great deal from internals like these.....

NO more time...sorry...

Ron

It is an axiomatic fact that while you meditate you are speaking with your own spirit. In that state of mind you put certain questions to your spirit and the spirit answers: the light breaks forth and the reality is revealed.
The steed of this Valley is pain; and if there be no pain this journey will never end.
Buy Low And Sell High (read left to right or right to left....lol)
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  #4 (permalink)
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Blash View Post
Honestly I say forgot these things, these OHLC derivatives and use market internals. ADD, TICK, NY NET VOL, VIX etc

Get to know the market in general. How it behaves on diff types of days. What does the TICK do as ES breaks the day low, as it pokes out below the IBL? Does it make a higher low? What does it mean how can you trade it?

You will gain a great deal from internals like these.....

NO more time...sorry...

Ron

Hey there,

Thanks for the note. I have been using ADQD and VOLQD, and TICK. I even built indicators for ADQD, VOLQD vs NQ but they were of limited value.

What kind of confirmation do you look for ? How do you judge Momentum? You mention IBL- are you using DomiMarket Profile?

Thanks again for sharing. Its helpful.

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  #5 (permalink)
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dBassFour View Post
Hey there,



Thanks for the note. I have been using ADQD and VOLQD, and TICK. I even built indicators for ADQD, VOLQD vs NQ but they were of limited value.



What kind of confirmation do you look for ? How do you judge Momentum? You mention IBL- are you using DomiMarket Profile?



Thanks again for sharing. Its helpful.



Not sure what DomiMarket Profile is. I use volume profiling, internals on 15 min charts, order flow visual and sound, auction levels etc. For Initial Balance I use 60min from RTH open.

I would recommend watching this YouTube video many times.

Ron

It is an axiomatic fact that while you meditate you are speaking with your own spirit. In that state of mind you put certain questions to your spirit and the spirit answers: the light breaks forth and the reality is revealed.
The steed of this Valley is pain; and if there be no pain this journey will never end.
Buy Low And Sell High (read left to right or right to left....lol)

Last edited by Blash; May 10th, 2016 at 09:54 PM. Reason: original post from Tapatalk posted YouTube video with url code changed BBCode to YOUTUBE here on site
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  #6 (permalink)
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Blash View Post
Not sure what DomiMarket Profile is. I use volume profiling, internals on 15 min charts, order flow visual and sound, auction levels etc. For Initial Balance I use 60min from RTH open.

I would recommend watching this YouTube video https://youtu.be/c0wp1ANxeH4 many times.

Ron

Thanks for sending that, I will watch this this evening. I know a lot of traders here use Market Profile. It seems to be a common thread.

Is it fair to say the majority of the more established traders here at Futures.IO use Market Profile?

Thanks,
Dion

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dBassFour View Post
Thanks for sending that, I will watch this this evening. I know a lot of traders here use Market Profile. It seems to be a common thread.

Is it fair to say the majority of the more established traders here at Futures.IO use Market Profile?

Thanks,
Dion

I would say many use aspects of Volume Profile. But trading is a very personal endeavor and the "right way" is something only you can determine.

This is how I understand Market Profile........Market Profile was created by Peter Steidlmayer sometime in the 80's which he used to trade as a floor trader in the Pits at the Chicago Board of Trade. In those days they would turn in their trading cards at the end of the day and the volume that traded that day could then and only then be calculated once it was all added up from the paper trade cards. Market Profile makes use of time and price with what is called TPO, Time Price Opportunity. This is because the volume info was not available to them during the day. Only once the day had ended.

I feel Volume Profile is a natural off shoot or the natural growth of Market Profile over time. Mainly because we now have more information available to us (volume) with all the wonders of the age in which we live. If I was to offer you some advice I would say learn something about Market Profile and then learn about Volume Profile.

I have attached and article from 2002 for you to study and report back anything you want.

RSI or STO or MACD for Spotting Divergences?-market_profile_basics.pdf

Ron

It is an axiomatic fact that while you meditate you are speaking with your own spirit. In that state of mind you put certain questions to your spirit and the spirit answers: the light breaks forth and the reality is revealed.
The steed of this Valley is pain; and if there be no pain this journey will never end.
Buy Low And Sell High (read left to right or right to left....lol)
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  #8 (permalink)
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dBassFour View Post
Hi there,

I've read in several places on this forum that using RSI is a better way to trade divergences. As I am selecting my initial tools to refine my strategy, I was curious of any opinions on which type of divergence would work best in the case of a a Double Top on ES or NQ for example. I have been using STO, but was curious about RSI which is another bounded indicator.

I have been using a Trial of RJAY's divergence indicator, and it appears to be using RSI- but I'm waiting to hear feedback from him on it. I'd also be willing to take recommendations on any other Divergence Spotters. (I will check out ECiDiv shortly)- however I didn't see any others recommended.

Thanks in advance!


Thanks

Personally I believe the best divergence spotter is our own two eyes. My advice? Learn how to "see" what causes a divergence pattern in the price action and RSI. Once we understand that, the RSI becomes pretty useless if we're just using it for taking trades only based on standard "overbought" and "oversold" prices (which I don't believe exist by the way). However it's probably less useless if we're using a RSI to help us "read" the overall market context/story. Even so, there are more "robust" tools out there for that.

That said, if you're looking for more objective ways to understand the market to trade better I'd suggest learning everything you can about volume profile with an emphasis on micro composites. A good profiler will do better then a RSI trader simply because the RSI is not capable of measuring market sentiment of all participants getting in and out of positions. Hope this helps.

Keep things complex. But not more complex then they need to be.

Last edited by Portland; May 11th, 2016 at 07:37 AM.
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  #9 (permalink)
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Which Volume Profile?


Portland View Post
Personally I believe the best divergence spotter is our own two eyes. My advice? Learn how to "see" what causes a divergence pattern in the price action and RSI. Once we understand that, the RSI becomes pretty useless if we're just using it for taking trades only based on standard "overbought" and "oversold" prices (which I don't believe exist by the way). However it's probably less useless if we're using a RSI to help us "read" the overall market context/story. Even so, there are more "robust" tools out there for that.

That said, if you're looking for more objective ways to understand the market to trade better I'd suggest learning everything you can about volume profile with an emphasis on micro composites. A good profiler will do better then a RSI trader simply because the RSI is not capable of measuring market sentiment of all participants getting in and out of positions. Hope this helps.

Portland, thanks for the note. Your answer is consistent with a lot of being reading on these forums.

I'm currently deciding which Tools to observe. I've installed the latest GOMI indicator, but it doesnt do ETH/RTH. I also saw that AltoMP did separate it between RTH ETH, however the last revision was 2012 and I wasnt sure if that would mess up my Gomi install. Any suggestions for Profile platforms to check out would be appreciated.

Thanks,
Dion

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  #10 (permalink)
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Blash View Post
I would say many use aspects of Volume Profile. But trading is a very personal endeavor and the "right way" is something only you can determine.

This is how I understand Market Profile........Market Profile was created by Peter Steidlmayer sometime in the 80's which he used to trade as a floor trader in the Pits at the Chicago Board of Trade. In those days they would turn in their trading cards at the end of the day and the volume that traded that day could then and only then be calculated once it was all added up from the paper trade cards. Market Profile makes use of time and price with what is called TPO, Time Price Opportunity. This is because the volume info was not available to them during the day. Only once the day had ended.

I feel Volume Profile is a natural off shoot or the natural growth of Market Profile over time. Mainly because we now have more information available to us (volume) with all the wonders of the age in which we live. If I was to offer you some advice I would say learn something about Market Profile and then learn about Volume Profile.

I have attached and article from 2002 for you to study and report back anything you want.

Attachment 208089

Ron

Thanks for all of the info. I've spent some time reading, and watching ShadowTrader explain Market Profile. Which Volume Profile indicator would you suggest I use to just keep an eye on / test out if I'm going to add Volume Profile into my Toolbox?

Thanks again Ron.

_Dion

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