FOREX THEORY
9 Rules for Trading Divergences
9. Take a step back
Divergence signals tend to be more accurate on the longer
time frames. You get less false signals. This means fewer trades but if you
structure your trade well, then your profit potential can be huge. Divergences
on shorter time frames will occur more frequently but are less reliable.
We advise only look for divergences on 1-hour charts or
longer. Other traders use 15-minute charts or even faster. On those time
frames, there’s just too much noise for our taste so we just stay away.
So there you have it kiddos – 9 rules you MUST follow if you
want to seriously consider trading using divergences. Trust us, you don’t wanna
be ignoring these rules. Your account will take more hits than BabyPips.com’s
Facebook fan page.
Follow these rules, and you will dramatically increase the
chances of a divergence setup leading to a profitable trade.
Here’s an example of how a bearish divergence failed. Can
you figure out which of these 9 rules Cyclopip broke?
Now go scan the charts and see if you can spot some
divergences that happened in the past as a great way to begin getting your
divergence skills up to par!
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