The MarketDelta Blog

Here are the screenshots from today’s activity with the delta divergence indicator. We again showed three different periodicities. The 1 Range, 1250 Delta, and 377 tick. The 377 tick seemed to produce the most signals and since a good portion of the day was a trend up, many of the signals from the 377 tick did not yield much profit.

The delta divergence indicator is a reversal indicator. It looks for instances where there is an underlying shift in order flow at highs of the day or lows of the day. This is why in the screenshots below there are only short signals after the initial buy signals in the morning. Essentially the market was trading higher and higher throughout the day, never retesting the lows in the morning. Because of this, the indicator will look for counter trend trades when when market is trending. On days when the market trades sideways or is mostly range bound the indicator will provide better signals because it is not constantly signaling against the trend.

Despite the fact it was signaling against the trend, the one thing you will notice is that many of the signals did either reverse temporarily or result in a pause to the trend. Just knowing when/where the signal occurs can give a trader enough breathing room to either buy the pullback of trend or even aggressively scalp based on the signal.