Extracto:What if you were already in a long position and knew exactly when to quit, rather than watching your unrealized gains, such as a potential Aston Martin down payment or a pair of Christian Louboutin high heels, vanish before your eyes because your trade reversed direction?
What if there was a low-risk strategy to sell around the top of a trend or to buy near the bottom?
What if you were already in a long position and knew exactly when to quit, rather than watching your unrealized gains, such as a potential Aston Martin down payment or a pair of Christian Louboutin high heels, vanish before your eyes because your trade reversed direction?
What if you believe a currency pair will continue to decrease, but you'd like to short it at a lower cost or with a lower risk?
Divergence trading is the term for it.
In a nutshell, divergence is visible when price action and indicator movement are compared.
It makes no difference which indicator you use.
You can use RSI, MACD, Stochastic, CCI, and other indicators.
The beautiful thing about divergences is that you can use them as a leading indicator, and they're not too difficult to notice after a little practice.
Divergences can be beneficial when traded correctly.
The best part about divergences is that you're usually buying or selling near the bottom or peak.
This reduces the risk of your trades in comparison to the potential gain.
Divergences in Trading
Consider the terms “higher highs” and “lower lows.”
Like avocado and toast, Hensel and Gretel, Ryu and ken, Batman and Robin, Jaz Z and Beyonce, Kobe and Shaq, salt and pepper, price and momentum usually go hand in hand. You get my drift.
The oscillator should be making greater highs if the price is making higher highs. The oscillator should be generating lower lows if the price is making lower lows.
If they aren't, it signifies that the price and the oscillator are diverging. That's why it's referred to as “divergence.”
Divergence trading is a fantastic skill to have in your toolkit because divergences indicate that something isn't quite right and that you should pay attention.
Divergence trading can help you detect a faltering trend or a momentum reversal. You can even take it as an indication that a trend is likely to continue!
Divergence can be divided into two categories:
-Regular and Hidden
We will teach you how to recognize these divergences and how to trade them in this grade.
We'll even throw in a delicious surprise at the end for you.
Siguiente lección
Divergence on a regular basis