Friends sharing thoughts...

[Sendme]

DWT still back testing my divergence strategy. I am calling this the
"Triple divergence trade".

Rules of engagement (15 minute chart)
1. Divergences on 3 indicators
a) RSI 8 with an 80/20 settings
b) MACD with a 9/18 setting
c) Momentum indicator with a 20 setting
2. RSI needs to be oversold (below 20)
3. At least 25 candles between divergence on RSI
4. Buy trigger is a close above the 20 EMA
5. Stop loss at previous swing low
6. Profit target is at a 1:2 risk/reward from obvious support/resistance
(usually close to the buy trigger)
7. Watch for consolidation around the 200 MA and then potential breakout/momentum trade to follow.

I personally like to trade off of a divergence, however a divergence in and of itself is not a buy trigger, and I was missing out on trades waiting for a .786 dip that does not always happen and getting stopped out more often than I liked with only using the RSI.





So I am back testing this strategy and like the results so far. The key is to have the patience to wait for the 3 divergences on the 15 minute time frame. I will share an example of how only one divergence would have failed.

This is the trade with all 3 divergences showing


This chart shows only one divergence


Once the price and 20 EMA and 50 MA cross above the 200 MA I am considering scaling out since it can turn into a momentum trade until we see 3 more divergences?

I have to admit that up until now I have spent much of my time trying to fine tune my entry and now I need to work more on fine tuning an exit. LOL



My goal is to find a decent (not perfect) strategy that allows me to enter a position with a larger size order and not keep trying to guess the bottom and average down.

After a buy trigger with this triple divergence, I would consider adding on a .786 dip

FWIW This triple divergence trade strategy tends to have my two other favorite trading strategies incorporated into it as well, I have not abandoned them. LOL They just all kind of compliment each other and give a stronger buy signal or possibility to add to a current trade and average up with more confidence.

I am not trying to come up with a new trade of the week. Just trying to fine tune my entry and trying not to miss a nice trade waiting for just one strategy to happen.




Have a great DAY all!!!!