Cool Trading Tricks with Divergence
- And hello, I was just laying down there taking a little rest, waiting for you to get here, uh first of all welcome. My name is Rob Booker and second of all, we have another contest coming up today. In fact, we wanna give away one of these, uh a can (chuckles) Wait, hold on, it's not a can, it's a Uh, that doesn't really do a great job, job job, job, that's right um today inside of our little youtube, we want to give away uh an Amazon Echo, so as you are watching live leave a comment, let us know where you're from. Leave a funny comment, let us know how you're doing and we'll ship you an Amazon Echo. Brian Foster's Ipad, that we gave away yesterday was just delivered, I just got the text message that Brian got his Ipad so welcome everybody.
I'm Rob Booker, this is my youtube channel. I would very much appreciate it if you would click the subscribe button several times and the little bell next to the subscribe button. And let me know that you wanna notify yourself You want to notify yourself every time I go live. Um also, if you don't like these videos, um just go watch some other video, some guy wrote yesterday and he goes, "Hey listen, if your tool is so great-", first of all, my tool is none of your business, "If you're tool is so great, then why don't you just give it to me for free and then I'll give you part of my profits, but I'm not buying it." And then I thought to myself, I thought I made it pretty clear that the tool is free, so you can have double your money back, anyway this is all about the free divergence indicator, called Knoxville Divergence, and a link to that is below this video right now, you can go get the Knoxville Divergence Indicator for free. Today I wanna talk about some cool tricks that you can do with the divergence indicator. And, I'm gonna start this off by Drawing on the screen if I can, okay come on, there we go.
Alright, so this is the Euro/British pound, but it really could be any financial instrument that you want. And as you can see here during this period of time, the Euro/British pound, is falling pretty significantly, you could call that a downward trend. And this is on the daily chart Alright, so the daily chart, this is the daily chart, uh, and that's actually the daily plan, it used to be called the daily chart and it was just a newspaper with one chart in it. That's how everybody charted, uh the financial markets back in 1940s, when Clark Kent and Lois Lane were partners, anyway, um let's say that on the daily chart, you see an obvious down trend.
And, how do you know that that's a down trend? Well for example, you might look at this chart and you might draw a trend line. And it might break a trend line. It might cross below the 50 day moving average. You might have built a special trend following indicator that tells you when a trend breakout has occurred, or maybe, you just look at the chart and obviously, the chart is floating downwards. So once you see, in any way, shape, or form that you like, that a trend has formed Well then you've got some possibilities there. You have some ideas- there are some things that you can do, in fact, I might even see if I have some other indicators that I can put on this chart. So go to insert, indicator, custom. Do I have? I do have my daily pivot points. So I'm gonna put my daily pivot points on here.
And, this is gonna be beautiful. None, none. So I'm gonna put some daily pivot points on here, I think I am anyways. (chuckling) This is gonna be great, okay so we'll go down here, we'll go to the 15 minute chart. So let's say for instance, I'll move this a little bit over, and I'm gonna show you what I'm looking at. Let's say that you like to do trend trading. And let's say you have access to daily pivot points. Ya know what I'm gonna do? I'm gonna put those daily pivot points inside of that indicator download package below this video. So if you click on that and you get the free tool, um you'll get the daily pivot points in there as well. So right here is a blue line that I'm now coloring red, this blue line This blue line, is a daily pivot point. Now that is yesterday's high low enclose added together and divided by three.
And price never hit that pivot point on the day that it was created, in other words, I call that A missed pivot point, a missed pp, that's a missed pivot point, that's an early warning sign that there is a trap. So I, here on the 15 minute chart, I noticed that this daily pivot point was missed or not touched by price. And now I might say to myself, "Well there's an indication, that we might have a trend." This may be an indication that that's a trend. So what could I do, and how could I use divergence to trade with that trend? Well I'm gonna show you exactly what we could do, right here on the charts.
So that happens, that happens back in January. Let's see if I can scroll back far enough on the charts into January, without messing everything up, oh yeah I can do that. Alright, here we go. Oh this is really good! So we've identified that the possible trend is up because a daily pivot was below price. Alright, so we having a good time? You ready to see some trend trading here? Check this shiz out. So once we've identified the trend is possibly up for whatever reason or down for whatever reason.
But let's say it's up for the purposes of this video. Let's say that we've identified that. Once we see bolish divergences, we're gonna buy with that trend. So, although divergence appears at first glance, to be a "counter trend trading system", if you first identify that a trend exists in a direction from a longer time frame chart, you can then drop to a shorter time frame chart and use divergences to buy with that trend. Now as I've been saying all along, I have robots that will automatically take the trades based on those divergences and those are the robots that I use and most of my trading is automatic and the reason that most of my trading is automatic is I don't have to be in front of the screen when I take those trades.
So, Nate for instance, it's not necessarily easy to identify a trend, but if you can get into the habit of waiting for a daily pivot to be missed, and then just then focusing on just trading with that trend, you could, I mean anybody could probably do that, huh? So we could go back to the 15 minute chart and let's see, does anybody have a currency pair that they wanna take a look at? So if you've got a currency pair, you wanna take a look at, let me know and if you're having a good time, let us know and I guess Nate, I mean they can be blatant about it, if you really want an Amazon Echo.
(chuckling) I love kinda doing this, isn't it kinda fun? I mean I kinda, I like making people feel good, it feels great, does anybody have a currency pair they wanna look at? Uh, US dollars and Canadian dollars. - No that's the worst one, no I'm not gonna, no that's fine, I'm just joking, that's fine. US dollar, Canadian dollar, here we go. Alright so we brought up the US dollar, Canadian dollar. I'll zoom in to make it a little bit easier to see, so in this chart here, the US dollar, this is the pivot, it's hard to see here.
But this is the blue pivot line, this is the blue pivot line, this is a missed pivot Nate. So the chart put that up there automatically and price moved down below that missed pivot. So that means that at the end of this day, when that day is over So at the end of this day right here, we can say, not with surety, not with magnificent certainty which doesn't exist. I mean, once you realize that nothing is certain in life and nothing is guaranteed, then the world is yours. To paraphrase Rick Sanchez. Okay, here we go, so if we then say, Nate, because this pivot was missed as prices dropping. If we agree that now the probability is that the trend is down, now what I can do Nate, is I can over the next couple of days, I can drop down to shorter time frame charts and look for divergences that might appear when price pops up.
So, right here at the end of this day, I'm gonna say my preference is for selling. And I wanna trade with that "possible, probable" trend, I can now make, if I just focus on the 25th, 24th, and so forth of January, I could focus Here we go. Now there's gonna be a bunch of arrows on the screen. I can focus, Nate, now on anywhere that we see divergences, now this is the five minute chart and there's no divergence line here.
If I drop down to the one minute chart Come on, come on. We interrupt this program for me to press the button on the monitor. I'll be right back. Oh come on, seriously? Alright, we'll just forget I said that. Sometimes it just doesn't like to do it, does it? Let's see here, please enjoy the music while your party is reached, alright. So, if I identify that the trend was lower, what I can do is stand in front of the charts and look for divergences, or I could turn on a robot that automatically trades divergences and tell it to only trade down and I could wait until that divergence line appears or the robot will wait until that divergence line appears and then it will sell automatically.
So what you do is you get a preference, you get a bias, you get a trend trade bias and then you turn the robot on to do the rest of the work. Now I'm gonna go one step further, Nate, and I'm gonna take this concept even farther. So this is now an one hour chart. This is the one hour chart of the US dollar Canadian dollar, so we've been moving up and we've been moving up, and we've been moving up and you can see that every once in a while, it's gonna miss a pivot point. Now it's hard to see on the screen because these pivot points are really thin. I think I can maybe change this line. I can change the width of this one, I'm pretty sure I can do that, so is everything just gonna kinda fall apart like a cheap suit? Alright, there we go.
So there's our missed pivot level right there. Now what I can do is I can automatically from that point onward for the next couple of days I can turn a robot on, and every time there is a retracement, we're gonna have a short term bolish divergency every time and we can just focus on the bi trades. We can just focus on those alone. But there's also something else we can do, we can go one step further beyond that. We could even say on the longer, super longer term charts, we can plot all kinds of great stuff, we could plot weekly pivots. And monthly pivots and if those weekly and monthly pivots are missed, then we have a super giant, longer term trends that are possibly setting up and then we could turn our robot on and only trade divergences in that direction. So I think we outta just do, we outta go another step further here with divergences and I'm happy anytime anybody wants to ask a question Nate.
Okay. - So if we've got a question as we go, that's fine. What I've done here on this chart is I've pulled up the weekly, so many of you know that the daily planet had to change to the weekly planet after Superman died because they couldn't produce enough news quickly enough because Clarke Kent was running around so quickly. This is now a weekly chart, love the weekly chart. Now everything that I just said becomes a lot simpler if you just switch to the weekly chart. On a weekly chart, just check your favorite financial instrument, here is, here are, two divergences.
A bolish Knoxville divergence. And a barish Knoxville divergence. On a longer term chart, the longer time frame you look at, the more reliable this is as an indication that price is going to reverse in the other direction. One of the simplest ways to become a better trader is to simply look at longer time frame charts and something as ordinary, simple, and easy to plot as divergence. In a lot of these cases when you see these divergences pop up on super longer term charts, they're ultra reliable, we have some time so I'm gonna scan through some longer term charts and we'd love to hear from everybody. What do you got? Questions? Have you calculated the average time that it takes for a price to come back to a missed pivot? - So I have I calculated the average time it takes for price to come back to a missed pivot? Generally, so here we go, 85% of the time, a missed pivot is then touched by price within four time periods from the date it was created.
So generally if a pivot is missed within four days, 85% of the time within four days, that missed pivot will be touched by price. If it's a weekly pivot and it was missed, generally within four weeks that pivot is touched. Generally if a monthly pivot is missed, within four weeks it is touched by price. If it goes longer than four time periods before it's touched by price, you have a super gigantic trend and it could be, it could be 100s of days or 100s of weeks before that missed pivot is touched again. If you're wondering if it works for other currencies, you could look at So we could go to, I don't know, the Australian dollar, Swiss Frank, if we could pull that up. I wanted to pull up some other currency pairs.
Maybe, maybe it'll work in a minute here, any other questions that came in? Oh here's the Swiss yen, as you're asking a question? Yeah, um, as soon as there's a missed pivot in the opposite direction, do you change your bias accordingly? - So if there's a missed pivot in the opposite direction do I change my bias accordingly? Yeah, I mean, typically yeah, if you're doing short term charting and short term trading, absolutely. Uh this is the swiss yen, it really doesn't matter what we look at and it's a weekly chart. There's is bolished divergencies at the bottom of the screen, that tends to produce a reversal and here's barished divergence on the weekly chart and it produces, on a weekly chart, this is a substantial decline, right here on short term charts. It produces, it generally produces some significant amount. This is the um, swiss frank polish zloty, so that's the polish currency. Once again, a barish divergence tends to have some kind of reversal and a bolish divergence tends to have maybe some minor, at least type of reversal, I never look at that so that's kind of crazy.
Here's the uh British pound, Swiss Frank, bolish divergence on the weekly. That produces a nice looking chart. Here's one, um bolish divergence and it only produces a very small amount of movement and then it falls lower, so it's not gonna work once again, nothing works 100% of the time, but the search for certainty is basically the journey to failure so, don't worry about something working all the time, I've had a great time with everybody today, Nate has there any comment today that was particularly enjoyable to read while you were producing the broadcast? Yes, uh, Ivan Chen said "Alexa, tell Rob to send it to Ivan" (chuckling) - Alright, Ivan Ivan you know how to get in touch with me on Facebook messenger or by email, you can reply to any email that I've sent, you can send me a message on Facebook messenger. And send me your address and we will ship you an Amazon Echo, we love you all, we're so glad to spend some time with you here on the broadcast uh we'll be back again tomorrow and we're gonna do some more tricks with divergence and I'm gonna get deeper into showing you how the robot trades with divergence and don't forget to get the free indicator below.
The robots package here it's I gave you something, it's time for me to tell you about what I have for you. Once again, right now, at the link below, that's how much the robots costs, I promised two weeks ago that I was raising the price on this to $(chuckling) - And I've been traveling throughout the world so I still haven't done it, if you want to get the robots before the price goes up, follow the link below right now and grab the robots that trade automatically with divergence. I would love to have you trade those together with me.
I love spending some time with you Come on, come on let's just do this together. I'll be back tomorrow, we're gonna have a great time, Nate this all worked today, I don't think that the video was really jerky. That was spectacular, so if we had a closing theme song, this is now where it would play. And then the credits would be rolling and then Nate's name would be next to every single thing that happened on this video.
Uh if you're still here watching, thanks for joining us, pleasure to spend some time with you today and we will see you tomorrow. .
Day Trading, Rob Booker, TFL365, Trading For A Living, Traders, Forex, Stocks, Divergence, MT4, Metatrader 4, Indicators
