The divergence trader

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I would like to know if anyone can tell my why this system gives so much back that it makes?

http://www.liveforextradingsystem.com/forex_trading_systems/divergence_trader.asp

next question...

is this the same system?

http://www.lightpatch.com/forex/Results_2006_06_23_JUN06/DivergenceTraderRon%20MT4%20v04.htm

I'd like to understand the logics behind this system better it might fit me. But I wonder what tweaking could be done to keep it from giving back so much?

 
Aaragorn:
I would like to know if anyone can tell my why this system gives so much back that it makes?

http://www.liveforextradingsystem.com/forex_trading_systems/divergence_trader.asp

next question...

is this the same system?

http://www.lightpatch.com/forex/Results_2006_06_23_JUN06/DivergenceTraderRon%20MT4%20v04.htm

I'd like to understand the logics behind this system better it might fit me. But I wonder what tweaking could be done to keep it from giving back so much?

Dear Strider.

Are you selling something?

If so, its ok, just goto commercial section.

 

no dude i'm not selling anything, I'm trying to learn something, why do you think I'm selling something? Do you know anything about how this system works? I want to know more about it.

ok i let this thing run overnight, looked at my demo account this morning and it had grown. how nice. It looked like it had just closed it's most recent positions just before I started looking at it. Now I've watched it for a couple hours and it's done nothing. Like it's just switched off. I still see plenty of profit potential in this morning's activity. I mean this thing was taking pips out of the ranging as well as the trending stuff from last night...so why would it switch off now? I don't get it.

 
Aaragorn:
no dude i'm not selling anything, I'm trying to learn something, why do you think I'm selling something? Do you know anything about how this system works? I want to know more about it. ok i let this thing run overnight, looked at my demo account this morning and it had grown. how nice. It looked like it had just closed it's most recent positions just before I started looking at it. Now I've watched it for a couple hours and it's done nothing. Like it's just switched off. I still see plenty of profit potential in this morning's activity. I mean this thing was taking pips out of the ranging as well as the trending stuff from last night...so why would it switch off now? I don't get it.

OK. The reason it does that is because it does not trade during heavy trending. Thus, the divergence kicks in and it does NOT execute orders. When the divergence (trending) has slowed down, it will then assume that the buying/selling has exhausted itself and then assumes that there will be some retraction of trend and will basically reverse trend. Very good idea. My suggestion with this EA is to trade it only after the US Session has run it's course for the day (about 17:00 GMT). Then you will see the magic of how this EA works.

I hope that helps.

 

ok so you're telling me that this thing doesn't like trending? it's built for ranging mostly?

that makes me wonder if I could have more than one EA running at the same time on a chart...one that ranges and one that trends?

 
holyguy7:
OK. The reason it does that is because it does not trade during heavy trending. Thus, the divergence kicks in and it does NOT execute orders. When the divergence (trending) has slowed down, it will then assume that the buying/selling has exhausted itself and then assumes that there will be some retraction of trend and will basically reverse trend. Very good idea. My suggestion with this EA is to trade it only after the US Session has run it's course for the day (about 17:00 GMT). Then you will see the magic of how this EA works. I hope that helps.

yes it does.

so it's not broken it just goes on sideline...ok.

In looking at the reports of this it looks like it makes alot and also gives alot back. why do you think that is? is there some additional parameter which could keep it from giving back so much which doesn't hinder it making gains in the first place? You mentioned specifying the timeframe it trades during.

Is there a way to preset specific defined timeframes to run and timeframes to sideline?

there was no explaination of the user defined variables in what I got..

could you explain to me what user defined inputs 'do' in general terms?

 

I have run this EA now for a few days. It seems to be making consistent small gains. It's quite a different approach from what I'm used to, to try to make gains from ranging rather than trending activity. Yet it's working so who am I to knock the results?

My observations of this EA which don't come from my understanding the code only from watching it trade are as follows:

It appears to make some initial determination of the market posture bullish or bearish (i've only ever seen it enter bearish in the past few days) and then it places a trade "at the start" of each new 15 minute candle period regardless of where the price is at that time. Then it keeps cumulative total of all the trades it's opened and looks for a combined profit target. It's stop losses are so far out it basically doesn't care about stopping loss it doesn't want to be stopped out of any position. It lets them all ride until the cumulative total eventually overcomes the worst of the worst that it's entered into during it's series. When it's profit target is eventually reached it closes all trades and starts a new series.

What this means dynamically is that it starts trading when the price lands on a plateau level and makes a new order every new period. This means in short order it's got a trade on pretty much every pip across the range of that plateau. Being as it's running on a 15 min period that means that the average range is about 12 pips usually in one or two plateaus 5 to 7 pips apart. I typically see it hold positions open across two of these kinds of plateaus before the subsequent move is down far enough to generate the closing and taking profit. This can mean it has anywhere from 12 to 38 trades open and in play. Last night it had 35 trades in play before it closed and took profit.

While this seems to be working generally I think there are some ways it could be improved.

The danger is that with so many open positions which simply keep adding upon each other that the position sizing isn't small enough and it triggers a margin call before the price action has made it profitable to close everything.

What I wonder is if some logic could be added to it that would pay attention from the time it starts a new series of trades to if the current price where it's going to open a new position is above or below where the series started. It seems to me that if it payed attention to that and if it started the series with a small lot size say .01 lots for it's opener. Then if every other position opened was lot sized depending on if the price was higher or lower than that opening position...(a user defined number of pips). Then in my theory assuming that the positions it's opening are short then if the price was higher than the opening position say 6 pips or more it could open with a lot size of .1 in stead of .01 which would assume that it's placing these position nearer the top of the plateau's trading range and it would be more advantageous to have a larger position near the top of the range and smaller lot size position nearer the bottom of the range and visa versa for long positions.

In theory it would hit it's profit target sooner this way and with less draw down while the trades are open.

The other option is to make it sensitive to some kind of short to moderately short term support and resistance lines and alter its lot size based on knowing that.

I think with a little work this EA could be made more agressive and more profitable at the same time. Unfortunately it's not work I know how to do because it involves coding/programming which I don't know how to do yet.

I would love to see this coupled with another strategy that targets trending action and the two working together! It's quite nice to leave a system running and go to bed and wake up in the morning to find it's made profits

I invite any programmers/coders to take a look at this and see what you can do with it.

Thanks

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