How to trade with an oscillator

[timepass]

As per ST, it takes 3 to confirm a divergence. In the chart, the trend hasn't continued to a 3rd pivot. Or maybe you will need to consider the 12.00, 14.00 & 15.00 as the price HH + stoch LH points as divergence.

 

[balasoft80]

Thank you. I couldn't able to grasp completely. Could u pls elaborate bit? Thanks

 

[timepass]

Thank you. I couldn't able to grasp completely. Could u pls elaborate bit? Thanks

Again, this is just guesswork on my part... I too am very much a newbie in technical analysis.

 

[balasoft80]

thank you. Let's try our best as we are in learning curve

 

[Smart_trade]

Regarding hidden divergence, there is a post with charts explaining the hidden divergence in this thread. Please go through that post.

Regarding normal divergence, the oscillator is said to be showing negative divergence when the price is making higher top but oscillator fails to make higher top. Some trends reverse on one divergence.....if the trend is strong , it needs two divergences ....in case of very strong trends we may need 3 divergences......after 3 divergences most of the trends will reverse. It is called 3 bullets...like small animals die with one bullet....but bigger animals don't die with one ...they need 2 or 3 bullets before they die.

Smart_trade

 

[rangarajan]

For those who are interested in learning more about oscillators,their construction,use etc...can go through " New Market Timing Techniques" by Thomas DeMark.It is a Wiley publication and one of the best books on Technical Analysis....

He has developed many unconventional oscillators and my favourite is TD REI...DeMark's language is very difficult to understand and that is why I chose to work with stochastics and did not introduce REI in this thread....I remember that I used to break long sentenses of DeMark into 3-4 small sentenses when I was studying DeMark techniques. But a serious trader who wants to work on trading ideas will find many in DeMark's books ( 3 books in all)

Happy trading....

Smart_trade

Dear Smart Trade,
since Fifteen days,i am following yr methodology & it is very comfortable for day Trade.
90% success rate & losses are minimal.
As i am a Micro trader,i trade only stocks.But i find that this method gives excellent results in Nifty even if one trades with this oscillator only.
Is it possible for you to explain yr favourite TD REI

My appreciation to you for yr Humility & Honesty in accepting Demark(post 32).
But for yr post,many including myself would not have known about Demark nor his Technic.
Thanks.

 

[Smart_trade]

Dear Smart Trade,
since Fifteen days,i am following yr methodology & it is very comfortable for day Trade.
90% success rate & losses are minimal.
As i am a Micro trader,i trade only stocks.But i find that this method gives excellent results in Nifty even if one trades with this oscillator only.
Is it possible for you to explain yr favourite TD REI

My appreciation to you for yr Humility & Honesty in accepting Demark(post 32).
But for yr post,many including myself would not have known about Demark nor his Technic.
Thanks.

Thanks for the kind words, Rangarajan.......I am glad that the points discussed here are useful to you in your short term trading.

TD REI was one of my main methods of trading a few years ago. TD REI has a complex construction and it is not a standard indicator in most of the charting packages.I was using Metastock that time and with the help of a programmer friend we had prepared a TD REI indicator utility in Metastock....a very crude version and we had 6-7 steps to come to final charts. I lost that utility during one of my computer hard disc crash and now I have shifted to Amibroker. TD REI gives indication of a period where the trend is likely to accelerate.

I am searching for TD REI AFL where I can change the parameters but still not got a satisfactory AFL. I have one but I am not able to change the parameters. Also over the years I have shifted to more price action based methods which I find much better. I still use Stochastics for profit booking....but entries are on the price action methods.....

If I come across the good AFL for TD REI, I will write a post giving the construction and its use in trading. Having used it for many years, I know how to use it but not getting a proper AFL......I am still trying.....hopefully will get it soon.

Thanks once again.

Smart_trade

 

[arti]

In the above chart, stoch is making higher low and price making lower low.Is it indicating a divergence? and does it mean price will pull up?

 

[rangarajan]

Dear Smart Trade,
I am attaching todays NF. Between 12.55 to 13.15,NF was trading below Stockhatic20(8,3,4),ie5bars.So on every rise,it was a short & not a buy above 20.
However,it never looked back & any short would have been a loss.
Pl explain,how u would have traded this.
I am unable to attach the chart as it says 'exceeds limits'.My knowledge on computer is limited.

 

[Smart_trade]

In the above chart, stoch is making higher low and price making lower low.Is it indicating a divergence? and does it mean price will pull up?

It is a positive divergence, it means the market will rally ( go up )

Smart_trade