Thursday, October 20, 2011

Triple Convergence with trends

The order of the day is to reduce reduce reduce. But never more than necessary. I find the most common theme running through effective systems are the use of Triple Convergence trends. Take the obvious element, direction. Which way are we going. Often times we seek out the largest time frame and hone in on it.

But this is missing the point. It is not where we have been, it is where we are going that matters. We also need to consider the stagnation of trend. One of the best ways to observe this is through divergence. 

  • Divergence comes mainly from oscillators. But of course they are merely reflecting the king of all indicators, price itself. Higher highs and lower lows are the foundation of a trend, and divergence will demonstrate immediately if the trend is in agreement with current price or if it has stalled. 


  • On a fractal level each and every completed bar, regardless of time frame. Surely by now it is obvious to anyone with any sense that markets are infinitely fractal and this fact shall never change. It is immutable as price trends itself. 
So here you have the symmetry, the undeniable theory that viable systems are based off of a triple convergence of 3 things, price, the tenor of trend and the fractal behavior of price intervals. With these three elements under control in your trading, the only thing preventing your system from making news highs is YOU! Good trading my friends.

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