# Divergence Count Worksheet

*Signal Pilot Education — companion to Lesson 34: Divergence.*

A divergence is price disagreeing with a number computed from price. Two settings decide whether one exists at all, and before either of them looks at an indicator, the swing rule alone decides whether there are thirty-three places to look or five.

> **Educational only.** Trading involves substantial risk of loss. Not financial
> advice. Past performance does not guarantee future results. Every number in
> this worksheet is one you measure on your own record; the figures in the
> right-hand column are what the lesson measured on its own sixty bars, and they
> are there to be disagreed with rather than copied.

---

## 1. Count the places before you count the signals

Take **sixty consecutive closes** from your own instrument. Mark the swing highs
and lows using one bar either side, then again using three, and count the pairs
of consecutive same-type swings. Not the divergences: the pairs.

| Swing rule | Swing highs | Swing lows | Pairs of consecutive same-type swings |
| --- | --- | --- | --- |
| One bar either side | | | |
| Three bars either side | | | |

| | Your number | Lesson 34's closes |
| --- | --- | --- |
| Ratio between the two pair counts | | 33 places against 5 |

That ratio is the size of the universe each setting grants itself **before an
indicator is involved**. Most people have never seen their own two numbers side
by side.

## 2. Change one number and recount

On the same sixty closes at your usual swing rule, mark every regular divergence
with a seven-period RSI, then again with a fourteen-period one.

| Oscillator period | Divergences found |
| --- | --- |
| 7 | |
| 14 | |
| **Found by both** | |

The ones that survive both settings are the only ones that were not a property
of the setting. On the lesson's own closes, ordinary values of the two settings
give three divergences, or two, or one, or none.

## 3. Calibrate the second push before you call a reduction a warning

Take **twenty two-push moves**, winners and losers alike, no trades required. For
each, compute the delta on the first push and on the second, and record the
fraction of the first that is missing from the second.

| # | Delta, first push | Delta, second push | Fraction missing |
| --- | --- | --- | --- |
| 1 | | | |
| 2 | | | |
| … | | | |
| 20 | | | |

Sort the twenty and read off:

| | Your number |
| --- | --- |
| Median fraction missing | |
| 75th percentile | |
| 90th percentile | |

**Your threshold is not a number from a lesson.** It sits near the top of that
distribution, and a reduction at the median is what a second push does on an
ordinary day.

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## What you are holding when this is filled in

Two numbers and a distribution: how many places your swing rule grants itself before an indicator is consulted, how many divergences survive a change of period, and where on your own distribution a reduction stops being ordinary.

*Signal Pilot Labs, Inc. — /education/curriculum/intermediate/34-divergence.html*