You can tell me that I needn't know how an engine works to drive my car. True enough. Does this forbid me to be curious?
Divergence is this kind of curious thing I'd like to understand.
You can find zillions of sites that explain you how to spot the four types of divergences. Never more than a copy'n'paste of each other. A lot of web sites and youtube videos show you how to trade the divergence. Each one adds his own pinch of salt to the recipe with no explanations.
I searched the web up and down I could find absolutely not a single site, document or video that explains what produces (or is supposed to produce) the divergence phenomenon.
There are traders using the divergence --sucessfully or not-- but I feel like none of them understand what they really do beyond waiting the phenomenon to happen. They argue for which is the perferct oscillator to use but how can they evaluate the best oscillator if they can't explain what an oscillator is supposed to do to produce the divergence?
At first I though the divergence was some mean to measure the acceleration of the price because the difference between two points on a momentum oscillator is an approxiamtion of an acceleration. But it seems that the volatility also plays some role. E.g. a congestion gives some time to the indicator to catch up its lag.
My questions are
- What does produce the divergence between the price and the oscillator?
- Why is a regular divergence supposed to announce a change of the trend?
- Why is a hidden divergence supposed to announce a continuation of the trend beyond the simple fact that a trend tends by itself to continue?
- Are the regular divergence and the hidden divergence the same or two completely different things?
- Does the absence of divergence carry some information?
- Can we use these answers to measure or estimate the divergence effect continuously and adaptatively instead of only at the peaks and valleys with assumed universal parameters?
Just to be clear:
1- I needn't you to cut and paste a upteenth time how to spot a divergence.
2- I can't care less of a screenshot that shows how well a divergence worked in the past.
3- I can't care less of a screenshot that shows how a divergence failed in the past.
4- I don't give one of which oscillator you prefer to spot divergence because without a proper explanation of the phenomenon that's just a value judgement.
5- I'm not interested to know if you believe it works or not because without a proper explanation of the phenomenon that's just a value judgement.
6- I don't care you're successful trading divergence.
7- I don't care you failed at trying and based on that experience you decided it doesn't work.
8- I know any causal filter lags. That's not the point of this thread.
Divergence is this kind of curious thing I'd like to understand.
You can find zillions of sites that explain you how to spot the four types of divergences. Never more than a copy'n'paste of each other. A lot of web sites and youtube videos show you how to trade the divergence. Each one adds his own pinch of salt to the recipe with no explanations.
I searched the web up and down I could find absolutely not a single site, document or video that explains what produces (or is supposed to produce) the divergence phenomenon.
There are traders using the divergence --sucessfully or not-- but I feel like none of them understand what they really do beyond waiting the phenomenon to happen. They argue for which is the perferct oscillator to use but how can they evaluate the best oscillator if they can't explain what an oscillator is supposed to do to produce the divergence?
At first I though the divergence was some mean to measure the acceleration of the price because the difference between two points on a momentum oscillator is an approxiamtion of an acceleration. But it seems that the volatility also plays some role. E.g. a congestion gives some time to the indicator to catch up its lag.
My questions are
- What does produce the divergence between the price and the oscillator?
- Why is a regular divergence supposed to announce a change of the trend?
- Why is a hidden divergence supposed to announce a continuation of the trend beyond the simple fact that a trend tends by itself to continue?
- Are the regular divergence and the hidden divergence the same or two completely different things?
- Does the absence of divergence carry some information?
- Can we use these answers to measure or estimate the divergence effect continuously and adaptatively instead of only at the peaks and valleys with assumed universal parameters?
Just to be clear:
1- I needn't you to cut and paste a upteenth time how to spot a divergence.
2- I can't care less of a screenshot that shows how well a divergence worked in the past.
3- I can't care less of a screenshot that shows how a divergence failed in the past.
4- I don't give one of which oscillator you prefer to spot divergence because without a proper explanation of the phenomenon that's just a value judgement.
5- I'm not interested to know if you believe it works or not because without a proper explanation of the phenomenon that's just a value judgement.
6- I don't care you're successful trading divergence.
7- I don't care you failed at trying and based on that experience you decided it doesn't work.
8- I know any causal filter lags. That's not the point of this thread.
No greed. No fear. Just maths.