To generate signals, I use my own developed robot in MQL5 language. The robot operates on a remote server and analyzes over 600 instruments on 4-hour, daily, and weekly timeframes. Trading operations are executed on the Admirals trading account.
Divergence Signal Formation Process
Divergence indicates a discrepancy between price movement and the values of a technical indicator. Divergence can be tracked using various indicators such as ForceIndex, OsMA, RSI, ADX, Stochastic, MACD, CCI, and others. In my case, the OsMA (Moving Average of Oscillator) indicator is used to generate signals.
Divergence occurs when the asset’s price forms a new high, but the OsMA value does not reach a new high, or when the price forms a new low, but the OsMA does not reach a new low. This means that the price movement and the indicator are not synchronized, which can indicate a potential trend reversal.
The process of forming a signal can be illustrated using an example of a buy signal from May 8, 2023, on Synchrony Financial (SYF) stocks on the daily timeframe. Several conditions must be met to generate a signal:
- Divergence between the OsMA indicator and the price, represented by a thin dotted line connecting zones 1 and 3 on the price and histogram chart.
- Zone 2 of the OsMA indicator, which Alexander Elder calls the “the bulls break the backs of the bears”. This means that there should be a segment on the histogram between zones 1 and 3 where it exits the negative zone and transitions into the positive zone.
- Candle closure in zone 3, after which the OsMA value exceeds its previous value.
- The presence of a false breakout, indicated by line 4 on the chart. This means that the price in zone 3 broke the minimum price level in zone 1 but closed higher than this level on the next candle.
After fulfilling all these conditions, the signal is added to the database for display on the website https://advisor.botrader.org/.
Description of Signal Table
Figure 2 shows a table with signals. In the current version, it has 7 columns, but the interface may change in the future. The main essence will remain the same.
The “ID” column displays a unique signal identifier in the database for easy reference.
The “Ticker symbol” column corresponds to the instrument ticker in the Admirals system (not always the same as the original).
The “Type of signal” column indicates whether it is a buy or sell signal.
The “Time frame” column shows the timeframe on which the signal was formed.
The “Signal status” column displays whether the signal has expired or not. A signal is considered expired if a certain amount of time has passed since its formation (1 week for the 4-hour timeframe, 2 weeks for the daily timeframe, 8 weeks for the weekly timeframe) or if the price has reached the 22-period simple moving average.
The “Date of signal formation” column displays the date when the signal was formed.
The “Expiration date of the signal” column indicates the date of signal expiration according to the conditions described above.
On the left side of the table, there is a sidebar with minimal filters that help simplify working with the table.
Telegram Channel for Discussion
This project is my hobby and is carried out in my free time. If you have a desire to discuss the signals or suggest ideas for their improvement, I would be glad to communicate on Telegram.