I want to share with you my approach to divergence trading.
I will start with the intraday approach and then move on to the swing approach.
Rules:
1.Trading hours (for intraday trading) 8am (GMT) to 5pm
2. Take profit = 60pips, stoploss = 20pips
3. Enter only when a momentum cross happens after spotting divergence ( hidden or regular)
4. Exit by opposite momentum cross (only after divergence is spotted before price hits either takeprofit or stoploss).
5.Risk less than 2 % of your equity per trade.
Now lest get started with Examples:
2nd Jan 2014, GBPUSD M15
This is a typical Buy entry scenario but this trade hit the stoploss. This is very normal so dont feel bad when your stoploss is hit. You cannot be right 100% of the time.
-20pips.
This is the 3rd of January 2014, GBPUSD M15
This is a good day with the TP reached.
It will not always be like this so enjoy your good days as they come and dont feel too bad when you make losses.
The Risk:Reward ratio is 1:3 that gives you a very big edge.
More trading examples still coming ( you will see some more complicated days with more than one trade)
