Trading Divergences

A divergence trading involves low risk where you are able to sell near the top or buy near the trend’s bottom. 

Another advantage of the this type of trading is you are able to identify the perfect place to exit amid a long position, rather than watching your unnoticed gains led by trading in reverse directions.  

With trading divergences, if a currency pair is anticipated to decline, you can proceed with a short at a better price or enter into a lesser risky position. 

Divergence can be witnessed by comparing price action, as well as the indicator’s movement. It’s not essential of what type of indicator you are about to use, whether it is an RSI, MACD, the stochastic, CCI, etc.

One of the great things about divergences is that it allows you to utilize them as a leading indicator, and after a few tries, you’ll realize it’s not so hard to spot.

With proper trading, generating profit can be consistent with divergences, and the best thing about it is you are normally buying near the bottom or sell near the top. Thus, trading risks are substantially small compared to your potential profit.   

Trading Divergences are likely with “higher highs” and “lower low”. Basically, the price and momentum move ahead like salt and pepper.  

If a price is to make higher highs, so does the oscillator, while if a price is to make lower low, the oscillator should make lower lows as well.  

On the other hand, if not, it suggests that the oscillator are diverging from each other. This is the reason why it is called as “divergence.”

Furthermore, it has an amazing tool that gives you signals that something might go wrong and you should pay attention to that. 

Spotting a trend that is weakening or reversal in momentum using divergence is very useful. You can as well use it as a signal for a trend to remain consistent.

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