What Every New & Or Aspiring Forex Trader... Still Wants To Know

Sladhafx posted some snapshots showing the divergence, check it out 301 Moved Permanently

Caver, remember that COT data is delayed by 1 week :slight_smile:

I was trying to find some more infomation on the different kinds of divergence because while it makes sense visually on a chart, I find the terminology confusing. Perhaps some of you more seasoned traders have this under your belt. I found a PDF that seems to have a more or less decent explanation of the whole mess and I attach it here on the chance that someone might find it helpful.

Does this match with what others know about it? Does this seem correct?

Divergence Type ---- Price --------- Oscillator ------ Trade

Regular (type 1)---- Higher High ---- Lower High ---- SELL
Regular (type 1)---- Lower Low ----- Higher Low ---- BUY
Hidden (type 2)----- Higher Low ---- Lower Low ----- BUY ------- trend following
Hidden (type 2)----- Lower High ---- Higher High ---- SELL ------ trend following

I have seen other explanations that indicate that type 2 has to do with consolidating price instead of price making HHs or LLs, but that doesnā€™t make sense or match our example. It does add to the confusion though.

thanks for sharing that.

That looks right to me.

Back in 2008, I remember learning about divergences from the Babypips school, if you can believe that. I traded it on 4H charts with a Slow stochastic, and actually had 6 months of consistent profitability with it. I think it blew up in my face because I didnā€™t really look at much more than the divergences and didnā€™t know when was a good time to be using that tool. Not to mention the markets were going haywire at the end of 2008, and my risk management wasnā€™t exactly superb.

Long story short, the Divergence article is still up on babypips (actually I think itā€™s been revised a few times since my reading it) in the High School, Grade 9 section.

I worry about adding indicators to my trading again, because I have a habit of focusing on them too much, but it gives me a warm fuzzy feeling to think that I might be bringing back a tool that has given me my only real run of success in forex trading.

thanks for the summary anyhow, I think it beats the PDF file and the babypips school section in terms of simplicity. :35:

Hi All,

First of all congrats to cubanpip & Akeakamai on their one strike successes, Iā€™m so envious.

I only traded Monday, Tuesday & Wednesday last week, which is a first for me. I was shorting Fiber only, against directional basis, so I was scalping (unintentionally). My stats;

15 trades, 11 wins, 3 losses, 1 b/even. start bal Ā£798.17, end bal Ā£906.67 13.59% increase.

Now Iā€™m not bragging here, but this is only my second week of trading ICTā€™s methods, and I donā€™t really know what Iā€™m doing. I canā€™t wait until I do know much more than I do now. Thanks ICT!

I am now at a psychological level as before ICT when I had a few wins under my belt, my thick head would make me believe I knew what I was doing, and I could predict where price would go and turn around! how stupid of me. I am battling this now and am determined to keep focused next week to try and preserve capital, learn more of ICTā€™s methods and to reduce my trades and to make them in line with the bias.
I will also try to zero in on a target as ICT asked last week, this will be hard for me to do.

GLGT to all for next weekā€¦bring it on!!

Hey nicely done, whatever you are doing is workingā€¦ and like you said imagine when you do feel confident and your bias is R-I-G-H-Tā€¦ because it will happen, just as sure as the losses :slight_smile:

just to keep it real, I took 5 trades last week, 3 winners, 2 losers. and it went WWLLW, and I shared the win at the end to potentially show the thread how a hold-for-weekly-range trade might look in real time.

I stand corrected PureMuscle

Here is the most simplified ā€˜ā€˜manualā€™ā€™ for the ā€˜ā€˜bazookaā€™ā€™ ICT has given us:

:41:

I think your diagrams of Hidden Divergence would be better if they showed price in a trend before and after the divergence.Newbies might find them confusing otherwise.
Also the diagrams,as drawn,show Market flow unchanged at the divergence (lower highs for the Bullish example,vice versa for Bearish) followed by reversals.
Sorry if it appears I am pouring cold water on your efforts,but please take these comments in the spirit of this excellent thread.
Have a good Sunday.

great shot at cable Michael
good u pulled the trade demonstration from terminal, entry vs exit. ā€¦ almost wouldnā€™t believe u, to get it from pipish low to pip high daily range.
time to pull the stochs 2 try to imitate

the way I wrote down the divergences into my notes - as simple as possible:

if Divergence is happening on the HIGHS, it is a BEARISH Divergence
if Divergence is happening on the LOWS, it is a BULLISH Divergence

I think Kubioā€™s chart is pretty clear, but in case someone still struggles to understandā€¦ I hope my post helps hahaha

Hi Kubio
Thanks for that, nice and clear.

If anyone is interested in how the bond markets work/think there is a great in-depth 101 aritcle from zerohedge: Subordination 101: A Walk Thru For Sovereign Bond Markets In A Post-Greek Default World | ZeroHedge

I hope I didnt confuse anyone when I said I was excited for feb 1, into thinking that is when ICT was starting the new thread and premarket analysis.

ICT has stated he will be starting in mid february after his anniversery vacation.

Feb 1 is simply when my account is going live, and hopefully I do not blow myself up before mid feb ;D

Now back to studying.

Fredā€¦if you read my post youā€™ll see I was talking about Trend Continuation Hidden divergence,[B]not[/B] Regular trend reversal divergence.

OKā€¦if you want to take my post as a personal attackā€¦fine.I know the diagrams come from Babypips School,but do me a favour and re-read my comments and have a good look at the diagrams.
I think they are mis-leading because they show the divergence occurring at a trend reversal,not in the context of an existing trend.The Divergence Cheat Sheet at the end of that section of BPSchool gives much better examples in my opinion.
I think ICT uses hidden divergence in specific situationsā€¦the most important being that he waits for confirmation that he will be trading in sync with the prevailing market direction.His latest trade video gives a good example of this.
Hope that clarifies!

Keep it positive folksā€¦ no need to get our feathers ruffled. The natives look restlessā€¦ perhaps a new video today might take the edge off?

:57:

apologies Michael, Iā€™ll delete my post, sorry to mess up the thread.
looking forward to next video! :stuck_out_tongue:

Thanks for reminding me why it is best just to look for divergence :34: