GM jav, and thank you for sharing that strategy with the rest of us! I like it and can see where it can be applied along with SGs fib box method for finding exit points and entry points as well as with wave counting and everything else we've learned along the way.
If we could only find a way to keep from entering during periods where you can see divergence on the momentum indi (or TDI or AO or whatever you are using) but the reversal isn't going to happen yet. In point of fact, if you look at the first example of divergence on that pdf you can see where there was divergence on the first price action lower low with a higher high on the momentum indi which might have been falsely interpreted as a reversal point as it preceeded a second price action drop with a second higher high on price action and lower low on momentum before the reversal actually occured.
And sometimes there are three waves of divergence before the reversal occurs and sometimes the price just coninues in the trend, making divergence a moot observation.
So how do we avoid the ineffective divergence? You can improve your odds with the TDI baseline being below 32 for increased odds on a long entry or above 68 line for improved odds on a short entry but even that can fail you. It's usually those damned shallow ascending or descending consolidation waves that kick our butts over and over again. I'm finding that the trix overlay indi window can help, along with combos of other lagging indis, but they can fail you or be misenterpreted too.
Maybe the exits are the easier answer because you are already in profit when you begin to apply them and you could potentially close out multiple positions along the way as each new fib extension is hit, but that doesn't answer the question of how to eliminate false divergence entries or how to avoid having to lock in losses with stops on the original entry.
