You've got it Steve. All the way. I just hope that my improved version does not "upset" you guys too much, but believe me it is doing what I always wanted it to do. So for today, we will shortly start on the Daily chart although my preference has switched to the 8-Hourly-chart!! I hope you know how to construct such an "animal" but I will make allowance for those NOT familiar with the construction of charts NOT usually found on MT4.

BTW, I read that MT5 is being released shortly?? Any idea (anyone) whether our indicators will be "accepted" by the latest version?

Talk to you all shortly. BTW, I just banked +70 pips on the short and remember my location is GMT+2. (Today Thursday 10th - just to let you know that I managed to get another 92 pips out iof this trade for a total of +162 for the day).

Good trading and best wishes, always.

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"Risk comes from not knowing what you are doing" The Tao of Warren Buffett.

"Avoiding mistakes, makes people STUPID and having to be RIGHT, makes you OBSOLETE." Robert Kiyosaki.

Excellent trade, ValeoFX. Regarding your mention of divergence, I explain below for newbies because it's such a valuable concept to me. If you join elite membership, all such threads on different trading ideas such as divergence, pivots, fibonacci are organised along with their indicators in one of the threads.

When ValeoFX talks about divergence it refers to where the price makes a higher high or a lower low than before (or even the same high or low), and the divergence indicator FAILS to make a higher high or a lower low than before. In other words, you can see the price getting higher before reversing, but the indicator on the second top or bottom seems to be headed in the opposite direction. In other words, momentum has decreased - the strength in that direction has actually significantly weakened and it is a reversal signal and a half.

ValeoFX also talks of a contracting triangle. I include an example (it's classic on the 4 hourly chart/longer time frames. You can catch them sometimes on lower timeframes if you know what you're doing and how to listen to the market. The tend to be continuation patterns (but can be reversal). In other words, consolidation followed by continuation in the same direction on the breakout. Again, the example ValeoFX is referring to is on weekly chart, which makes it that much more powerful on the breakout.

Two classic examples indicators which can show divergence for you include MACD, RSI. You can see the examples of divergence that I have drawn in below in recent times on GBP/USD, including CCI. Really, really powerful stuff.

Divergence (2 examples)





1) 4 hourly chart subtle divergence on MACD - do you see it?
Price makes a set of three lows, but MACD is slowly making HIGHER lows (blue line on MACD). Blue and Red triangle on chart point out the double/triple bottom and indeed the divergence point. There is divergence evident on the CCI I've added, too.

2) The second example shows the same bottom formation on GBP/USD and the divergence on the MACD. There is also subtle divergence on the RSI. I've actually drawn in a British Racing Green trendline to show you the downward direction of the trend on the chart and the upward direction in the MACD (ie the divergence)

NB. Also has an amazing example because you have the evening star candlestick pattern in place the MA with a compliant MACD further on and it is daily chart. Can you see it? What a beauty! This "evening star" candle (it is the one before the last printed) has a particular long wick/shadow (indicating sellers coming back in) and is also around the resistance provided by the MA line in the middle of the bands. It's a good signal - simply wait for the next day candle to start to turn black for confirmation of some good short action that day. This is one of the ways I look out for day direction and I wholeheartedly agree with ValeoFX that studying the monthly, weekly and daily outlooks can provide extremely effective hints at the action for the day ahead (the above is just 1 example of many of "classics")

Triangle (2 examples)





Both of these triangles were continuation of the prior trend. I just had to simply draw in the lines and enter on the break of the triangle point. Again, it needs to be said that the lower the timeframe, the less likely the pattern is "valid" - but worth watching out for in consolidating market. They can be quite an effective "scalping" strategy in choppy markets (example 2) for around 10-20 pips on these lower timeframes I've found.

Hope that helps. It's an essential foundation to understand this idea/concept of divergence I think to understand ValeoFX's excellent new weekly template examples.

The 13 pips was profit here. I was trading against trend and it was a "bonus" trade that day - there was more in it, but like I said before using triangles on a lower time frame than 1-4 hours requires a pretty substantial risk appetite. I have a fairly strict trading plan I follow because I am starting a private investor club later and want to be able to make promises I can keep!

I think the CCI may also be a reverse "ghost" in any regard, it is a continuation of the previous uptrend after the "anomaly" big bearish candle.

It's a 15 minute chart with a classic Woodies CCI (15 minutes, 14,6 settings). I drew it in after to show there was a nice zero line cross in place.

More info on divergence, indicators etc: Divergence Indicator

ValeoFX, you have asked me before for some of how I use or compliment your strategy. The above is a taste. Hope it helps newbies on some of the ideas you mentioned in the description of weekly template.

An 8 hour chart animal

Attached Images

masked bear.jpg (7.4 KB, 608 views)

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Picasso is the best !

I realise a lot of people know about divergence, and that there's excellent threads discussing it ( --- I linked to it above) but when I personally started trading XO method many moons ago, in fact before it was released to public, I did not know, so there's going to be newbies who haven't got the basics. I did not know what "bearish engulfing" meant --- and why would I? So I posted the above so someone else doesn't have to go through the same thing. Forgive me please ValeoFX for hijacking your thread.

Hi Valeo!

I look forward to more of your generous leadership.

SUK, IF more traders will have your commitment to improving everyone else's understanding of the trading process, this world will be a much better place. Thank you for your excellent contribution!! You are NOT high-jacking this thread, in fact I welcome contributions like yours with open arms.

If you can, I would appreciate you carrying on so that everyone can understand the concept better. And not only just that, anything you feel can be beneficial to this Thread is welcomed.

Wishing you a great day, my friend.

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"Risk comes from not knowing what you are doing" The Tao of Warren Buffett.

"Avoiding mistakes, makes people STUPID and having to be RIGHT, makes you OBSOLETE." Robert Kiyosaki.

Thank you Poocher, it is quite a humbling experience, but I look forward to us achieving great success together.

Best wishes.

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"Risk comes from not knowing what you are doing" The Tao of Warren Buffett.

"Avoiding mistakes, makes people STUPID and having to be RIGHT, makes you OBSOLETE." Robert Kiyosaki.

Please understand that the H8-chart is NOT a regular chart on MT4 as yet (I hope it will change with MT5).

So, what you have to do first is to open an HOURLY chart and attach to this chart the indicator called Period_Converter_Opt. Under INPUTS, look for the 3rd line which says: "PeriodMultiplier" and choose 8 for the H8-chart to be formed. Now minimise this chart UNLESS you wish to use it as a "normal" HOURLY Chart (which I do by the way) to save on extra open charts. (This indicator is loaded seperately for your convenience)

Now go to File > Open Offline and double click on say GBPUSD,H8 (or any other currency you are trading).

Immediately you have the 8-HR-CHART available. Now you may use the H8-Template I am supplying you with and you will have the trading H8-chart.

My H8-chart up-dates, but some of my friends complain that theirs don't. All you have to do then is to just call up another chart every 8 hours and that is no big deal anyway. The reason behind the 8-hour chart is that on average, we trade 2 of those candles per day and that is by far more accurate than the Daily chart.

The next chart down is the H4 and I will also place that immediately after this one.

Attach you will find the zipped file with everything you need and seperately a screen-print so that you can compare.

By the way, I am testing a home-grown indicator by my friend Gerhard (DayTrader) and that is the little arrows you see in Magenta and Aqua. So far it is doing what it should (RSI-based whatelse ) BUT for the life of me, we cannot get it to work in combination as yet. Mladen is trying to help us sort this problem and until such time, just bear with me. Personally I like to believe that we need it.

Let me know if there is anything I should explain better.

Best wishes.

Attached Images

h8 chart.gif (38.0 KB, 528 views)

Attached Files

	H8 Chart.zip (12.0 KB, 109 views)
	Period_Converter_Opt.mq4 (15.4 KB, 96 views)

__________________
"Risk comes from not knowing what you are doing" The Tao of Warren Buffett.

"Avoiding mistakes, makes people STUPID and having to be RIGHT, makes you OBSOLETE." Robert Kiyosaki.

Sorry for the slight delay, but the H4-chart will be up in 30m.

__________________
"Risk comes from not knowing what you are doing" The Tao of Warren Buffett.

"Avoiding mistakes, makes people STUPID and having to be RIGHT, makes you OBSOLETE." Robert Kiyosaki.