So after another few days of experimenting with divergence, I feel like im getting closer to developing a strategy that will be consistently profitable. Ive scrapped the moving averages and started using pivot points and price action as a primary indicator with regular divergence. The results have been pretty good. Ive found that using hidden divergences alone, however, is even more reliable, especially with a TP of around 20 pips.
A couple of questions though:
What time frame do you divergence traders feel is the most reliable? Ive been using H1 and M30 for the most part, but find more divergences occur on M15. Does your time frame preference vary on whether it is hidden or regular?
Does anyone use or know where I can get a good auto pivot point indicator?
Don't mean to thread necro, but I also have a divergence question.
It seems most people say that trading divergence is dangerous if not used along with other analysis of possible trend reversal or continuation patterns.
Can someone please tell me if I am on the right track with my trading system.
Timeframe: 5 Minute
Pairs: EUR/USD, GBP/USD, USD/JPY, AUD/USD (just some pairs I've been watching but obviously divergence should work with all pairs).
Obviously I'm watching price and oscillator for divergence signals so no need to go into indicators.
Let's pretend my divergence is indicating a bullish move in price. I move to H1 TF and make sure price isn't touching or near a trend line/channel or support level. I also make sure RSI isn't > 80 already indicating that strength might already be gone. Ideally RSI is < 50 on H1 and < 20 on M5.
I enter the trade long.
I have 2 SL levels set. At -10pips I close half my position, and at -15pips I close my other half.
I have 3 TP levels. At +15pips I close half, at 25pips I close 25%, and my final 25% runs on a Trailing Stop. At +10pips I set my SL to break even.
How is this trading system?
Would you suggest different money management rules for Cable? I'm worried 10pips might be a little too restrictive although it seems with divergence that if your wrong then most likely your SL and beyond will be hit. But you still would like a little breathing room as I have seen Cable go -50pips before turning around and going +70 on a divergence signal so it's a tough call.
Using M5 chart I get a lot of divergence opportunities and so far it seems like their accuracy is quite good in the past couple weeks I have been trading but any input would be great.
For divergence. You saw the first divergence. You enter and it trigger your stoploss. It then make a new higher higher or lower lower and present another divergence opportunity. You enter and it then once again trigger your stoploss.
Your first thought would be it reach very higher or lower already. Shortly afterward, the divergence comes again. This time should be quite safe. You enter again. It for goodness sake, start move sideway and becomes consolidation before it makes another newer higher higher or lower lower.
Has my describtion sound familiar to you all. Arrggg dammn. After that, it then start moving in your desired direction. WTF....ha ha.
hi vincent 123
yeah, trading divergence only against a strongly trending market is a bit risky. as others have said you really need other confirmations as well.
eg. s+r, double tops, pivots etc.
then if you also have price confermation (such as a pin bar) you should get on a lot better.
know what you mean tho- can make ya pull yer friggin hair out!!!