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Filed under: Tips and Strategies | 02/28/07 11:18am UTC
smangwani

How to Catch Simple Moves

It’s really not that difficult.

Keep things simple, do not over complicate things by following too many indicators, decide on a trade plan - and follow it diligently, with no exceptions.

If the market does not give you the setup (as per your trade plan), take a break, go golfing, go swimming. The markets will always be there, and your setups will appear.

It’s better to wait for a high probability trade to occur, than to enter the markets just because you want to trade.

Divergence is considered to be one of the few leading indicators of price, and has a high success ratio. It occurs when there is a discrepancy between the price and a technical oscillator indicator such as Stochastic, RSI, MACD, or CCI.

We can define it as the failure of the indicator to confirm the higher high or lower low of the price, causing a discrepancy or “divergence”.

Example of a divergence trade

The precise way to trade these setups is taught in our Live Trading Room:

We lay down conditions to determine if it is a valid setup, and define exact points of entry, stop and targets.
The relevant levels for this example are marked on the chart, and they are instantly calculated as soon as the setup occurs.

The one thing you can learn from this post is that you must spend some time on getting a good education. In the business of trading, you are the asset, and you must invest in yourself.

Shorten your learning curve, by taking advantage of other traders’ experience!


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