SMT Divergence

Discussion in 'Systems and Methods' started by outthislife, Feb 1, 2015.

  1. Decoherence

    Decoherence Well-Known Member

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    :thumbsup: :thumbsup:
     
  2. rod178

    rod178 Well-Known Member

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    Possibly the real issue is that some are still searching for the 'magic indicator', which clouds their ability to comprehend what has been stated many times by several people.
     
  3. rod178

    rod178 Well-Known Member

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    Expecting solid move up in Cable, so Long into poor UK trade Balance numbers
    ie under AR Low
     
  4. rod178

    rod178 Well-Known Member

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    it must have heard me ;D
    Obviously NFP in less than 3hrs may induce me to exit early

    [​IMG]
     
  5. outthislife

    outthislife Well-Known Member

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    I see the potential usefulness in watching the USDX when you're trading FX. So in order for me to understand the SMT divergence a little better, I created an indi for personal study. I'm a programmer so it's just how I can easily "experience" it.

    Here's the 1h chart for the cable:

    [​IMG]

    Bottom indicator window is the OHLC chart for the $DXY (cash) and its divergence "ratio" is the purple/blue line overlayed. It goes down when there's a divergence, and is in the middle or in the upper region when it's correlated perfectly.

    So obvious price isn't going to be 100% correlated, but it's relatively close most of the time. Lets zoom in to 15m.

    [​IMG]

    Note the big spike down at 10 and 13. That's divergence. The spikes up are, I guess, perfect correlation 8)

    So at 10-11, we're diverged from price. DXY wasn't doing much, made slightly higher highs but we didn't get any lower lows. Noise IMO.

    At 13-14, we're diverged. DXY made a bearish candle, and cable made a nice little doji. See here for a zoom in on that region:

    [​IMG]

    So I guess it can give off some signals, but I won't be relying on it 100%. It did do this nicely at the 1.52 level after taking out the highs of the Asian range and previous day so I guess there's that confluence.

    ToS scaling is odd so it looks a bit weird. But just quickly manually backtesting this, it does have its share of accuracy when it's conflated w/ other tools.
     
  6. rod178

    rod178 Well-Known Member

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    I'll be interested to see how you go. I've only ever used SMT on M15 as a short term confirming tool in the AS.
     
  7. the golden gun

    the golden gun RINSE & REPEAT

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    rod178:

    very precise!
     

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  8. rod178

    rod178 Well-Known Member

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    precise, yes indeed. Some Traders use similar setups to trade post News big moves. Something to investigate further.

    Got my RR 1:1 by standing in front of a Steamroller pre NFP, I'll have to stop doing that.
     
  9. the golden gun

    the golden gun RINSE & REPEAT

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    Just think of it like this. NFP is creating order blocks for next week. Whatever NFP does, you can be sure to capture most of it next week on a NFP block.
     
  10. the golden gun

    the golden gun RINSE & REPEAT

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    1H block on EJ with 23R potential.

    (SL objectively placed 5 pips below the order block)

    this is getting insane... not that it is easy to do real time... but it's there!
     

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  11. outthislife

    outthislife Well-Known Member

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    Your stops are 5 pips? Dang.
     
  12. Computater707

    Computater707 Well-Known Member

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    I have been starting to observe SMT and see if I find it useful.
    Last night it helped me confirm trade direction and entry.
    Tonight I noticed this Divergence/Convergence "Coffin".
    I think it indicates that SM plans to take the Cable up out of the London Open.
    We shall see.
     

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  13. the golden gun

    the golden gun RINSE & REPEAT

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    my SMT template.
     

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  14. dazjw2311

    dazjw2311 New Member

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    any idea where this smt indicator is? or has another one. The one on page 1 doesnt work.

    Many thanks
     

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