Divergence Trading , MACD + Stoch RSI - Help

Beginner Questions
1

Hi guys, been trading forex for a few months and finally settled on trading divergences as my main strategy,

Current strategy involves:

  1. 4hr chart to spot divergence
  2. Using MACD + Stoch RSI for confirmation
  3. Entering trade on an engulfing candle or another strong signal

Been trading okay, been attributing the majority of my unsuccessful trades to lack of patience/not waiting for the candle to close.
Was wondering if any more experienced traders can spot any flaws in this strategy or if you have any suggestions on how to improve would be much appreciated. Seen a lot of discussion on using Support + Resistance but im struggling to spot these on the chart especially, from my understanding, that a higher high or a lower low is necessary for divergences to occur, so where are the lines of support and resistance? Because surely a higher high or lower low must go past these lines of resistance?

Any help is greatly appreciated, thank you!!

2

Hi, lots of losing trades in a row do not mean that the strategy is losing over the long term. (tests on historical data are required). Moreover, the description of your strategy is quite poor, what does another strong signal mean? Regards Greg

3

Hi Greg, I meant other strong candle stick patterns, such as evening/morning star , doji’s etc…

4

Overall still profitable, but barely. Not the type of progress i’d expect after a few months though if that makes sense

5

ok, what next ? you will open market order? pending order? where did you set sl and tp? sl is fixed pips or based on ATR? what money management do you using, fixed size? fixed amount? based on % account ?

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6

Ill open my position at the start of the next candle, place SL at the most recent swing high/low with TP about 1.5 - 2x the SL. Will usually adjust my SL to a trailing one once im at a decent level of profit. In regard to money management this is the first time I’ve heard those terms, sorry. Ill usually use about half of my account if the SL is relatively far as to not loose as much. Hope that answers you’re question if not i can clarify further.

7

ok, if you have 1000$ on account, how big SL is in one transaction? 500$?

8

About £100, obviously depends on the trade but I’d say that’s about the average

9

ok, this is 10% per whole account, that is to big, 5 losses, and you don’t have half account

10

Yeah true, any tips on how to improve it ? I dont see how i can make it lower as surely I have to place SL at the point where my assumption is invalidated? I can send you some screen shots of some trades I’ve done if that helps?

11

I completely agree, my first day trading had a few losses in a row and it’s taken me a while to claw my way back

12

I sent you PM

13

Hi mate, I have a pretty similar strategy for scalping and I would suggest you to add a Elliot wave analysis with divergence and MACD.

14

Thank you mate ill check that out right now!

15

Well only backtesting on historical data can improve your knowledge about how your strategy should perform. Past results don’t indicate future returns but well if your premise that markets repeat their history then you proceed with backtesting anyway it’s very useful experience.

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