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Recent discussion in the "New Method" thread has centered
on the subject of diversion.
Examples of diversion can be found in countless trading books
by countless authors over the past few decades. Taking their lead,
like a fish on a hook,
I can't imagine how many thousands of divergence patterns I've
looked at, studied, and attempted, sometimes with limited success,
to code and test. I've printed reems of continuous feed printouts
and hand-picked the divergence and I've coded and crunched
others over mounds of data and with endless variations.
Not to mention how extremely difficult divergence is to code.
It can occur from a minimum distance of 3 bars to an unlimited
maximum distance.
My conclusion:
I discounted diversion as worthless about 8 years ago having
wasted countless hours over too many years.
I find divergence not to be a tradable anomally but, instead,
as simply a flawed indicator's inability to properly track price.
Sometimes it's there, sometimes it's not. Whether it's there or
not, price still turns as the indicator turns. And at the same time,
divergence has nothing to do with the magnitude of the move
as compared to a wave with no divergence. I can find no legitimate
reason to place a trade based on an indicator flaw.
Divergence has been a wasted diversion. I post this because I
wish someone could have successfully convinced me of this years ago.
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