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6/31
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Hello community members, my this article is about Divergence Trading. which is a great tool when it comes to trading forex. we shall learn about the facts and ways to trade divergence. And how we can use it to be profitable in long run.
Sell High - Buy Low

What if there is way to sell near the top or buy near the bottom of a trend ? And if you are already in a long position and you could know ahead of time the perfect place to exit instead of watching your unrealized gains.
Well, There is a way! It’s called Divergence Trading !!
Divergence can be seen by comparing price action and the movement of an indicator. It does not really matter what indicator you use. You can use RSI ,MACD , CCI and the stochastic. The great thing about divergences is that you can use them as a leading indicator. When traded properly, you can be consistently profitable with divergences. The best thing about divergences is that you are usually buying near the bottom or selling near the top. This makes the risk on your trades are very small relative to your potential reward.
How to find out Trading Divergences : The price and the indicators normally move hand in hand. If price is making higher highs, the os…
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yellownight avatar

good luck

IgorKolchik avatar

good

Vlad73 avatar
Vlad73 30 Mar.

good article

CTygeHT avatar
CTygeHT 30 Mar.

Good article!

hrustiashka avatar

Хорошая статья. Спасибо!

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28/32
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OVERVIEW OF CONVERGENCE AND DIVERGENCE IN FOREXfirst define the terms convergence and divergence. let´s goConvergence in forex describes a condition under which an asset's price and the value of another asset, index or any other related item move in the same direction. For instance, let's assume a situation in which market prices show an uptrend, and so does our technical indicator. In this case, we face continuing momentum, and there is high probability that the trend will persist. So, here, the price and the technical indicator converge (i.e. follow the same direction), and the trader may refrain from sale, as the price is likely to further grow.Divergence in forex, to the contrary, describes a condition under which an asset's price and the value of another asset, index or any other related item move in opposite directions. For instance, if we consider again a situation where market prices grow and the technical indicator's value drops, we will face decreasing momentum, and thus signs of trend reversal. The price and the technical indicator diverge, and therefore the trader may opt for running sale for procuring the highest profit.So, basically, forex divergence trading and conv…
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Sebine avatar
Sebine 22 Feb.

Good article!

marcellogyn avatar

thanks Sebine

ForexAlyoum avatar

i like divergence so much , but what is the last indicator ?

marcellogyn avatar

this last image uses a paid indicator .. is not in the session indicators of mt4..

Lovely_bee avatar

good job )

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11/52
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in this article i want to share the way I use divergence, thought in a particular way
Fundamentals
My personal preference to find this opposite is stochastic
I simply use it to understand if the market doing something opposite than the indicator is telling me to do
When it comes to guess we want to plot areas where the indicator and the price are not lined up
On this chart we have a high area making a lower high, on the indicator we have a high practically making a slightly lower high
It is practically the same thing
On this one we have a high going down to a lower high, on the indicator the trend is going high
How to connect?
The way I do it is: in an uptrend, if the market is recently going up wards, and it coming to come back down we want to connect our highs
In an uptrend i connect my highs
In a downtrend I connect my lows
These opposites basically indicates that is market is getting ready for an inverse
What is the best way to figure out where the opposite actually occurs?
I put a horizontal line in the area we are going to plot the high from and o horizontal one in the same area in the indicator
Has the line ever bean breach?
And I do the same thing with the indicator has t…
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Martell avatar
Martell 27 Apr.

good article

LILYY avatar
LILYY 28 Apr.

good job

MOHAMEDALLAM33 avatar

i like divergence ;)

anashape avatar
anashape 19 May

good job!

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33/56
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La semaine du 10 Octobre promet d'etre assez volatile, faisant suite au flash crach du GBP et comportant des News majeurs sur le dollar le mercredi ,jeudi et vendredi.
Voici trois analyses de charts que je trouve interssant à suivre.

Analyse de l'or.

Sur le daily la paire est passé sous son EMA 20 après avoir marqué trois lower Highs, cela indique la présence d'un Down trend.
Mais d'un autre coté ce down trend serra limité par le higher low à 1200 qui serra d'autant plus fort puisque c'est un chiffre rond significatif et qu'il est très prés du dernier lower high à 1190 qui a été franchi au cours du mouvement haussier.
Sur le Rsi nous assistons à une divergence négative qui a donner lieu au mouvement baissier, et en phase de construction une divergence cachée qui peut atteindre le niveau Rsi 20 , cette Divergence cachée et en phase avec le scénario d'un rebonds de la paire du niveau 1200.
Au cours de la semaine prochaine il serra très intéressant de monitorer la paire à l'approche du 1200, attendre surtout l'apparition de bougies haussière bien former pour confirmer le rebonds.
Analyse du Brent.
Sur le daily le Brent a cassé une ligne de tendance qui a débuté le mois Juin 20…
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priceaction113 avatar

GBP is not fallow any tech now a days I think it is last 3rd leg of down side till 1.17 area will go long around this level

k_morocco avatar
k_morocco 12 Oct.

priceaction113 thanks for your comment , i thinks that we can see more down trend un the GBPUSD, in relation to technical analysis it is a valuable tool for framing trades as it gives you probables scenario . IN  the end the market do what he have to do

FXRabbit avatar
FXRabbit 23 Nov.

Well written!

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10/51
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  • How to use the delta (cumulative delta) for the price analysis?.
    It compares the value of the momentum and correction, that is, the behavior of prices and the delta.

  • Two options are possible:

  • 1. The movement of price and the cumulative delta correlated.
    2. The movement of price and the cumulative delta do not correlate.
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isbar avatar
isbar 28 Apr.

Muy buen trabajo. Gracias

massimoscalas avatar

Very interesting....thank's!

Alexander22 avatar

неплохая статья, молодец!

TaniaS avatar
TaniaS 5 May

Nice job!

Uladzimir avatar

интересно

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8/51
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1. Introduction
In Japanese Candlestick Charting Techniques, Steve Nison included a section on using candlesticks with oscillators including stochastics, RSI, and moving average oscillator. According to Steve Nison, oscillators are objective and augment the more subjective candlestick patterns.
In this article, we will focus on trading using RSI and candlestick patterns. RSI measures the momentum of gains and losses.
The relative strength in the formula refers to the ratio of average gain to average loss. These averages are calculated in a way similar to the exponential moving average, before turning the relative strength into an index that fluctuates between 0 and 100.
Other than RSI divergences in our trade setups. Divergences occur when RSI does not support prices. The charts below illustrates RSI divergences, we will also look out for candlestick patterns.
2. Short Entry Rules
  1. A bearish divergence between RSI and the price.
  2. Sell with a bearish candlestick reversal pattern (Bearish Engulfing / Shooting Star / Bearish Harami) .

[list][/list]…
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WallStreet6 avatar

Good one!

Alexander22 avatar

great article

klintons avatar

Good job :))

egg avatar
egg 18 May

Dobrze napisane.Dziękuje celu przydatne

Eleonorra avatar

nice

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40/70
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Normally, when trading in the forex market, you expect certain currency markets that have similar currencies to behave in the same manner; this is not always the case. An example is Eurusd and Gbpusd markets, both markets have the dollar in their combination so it is generally expected that if Eurusd is going up, then the Gbpusd market should also be going up.
This is what is referred to as positive correlation between two markets. The common factor in both markets is the United States Dollar, so both markets (Gbpusd and Eurusd) are expected to react in the same way to the state of the dollar. A scenario where the dollar is making gains, then both markets would be expected to be heading down, and if the dollar is experiencing losses, both markets would be expected to go upwards.
On most brokers, their correlation tables always show a strong positive correlation between the Gbpusd and Eurusd markets.
Even the charts support this theory, with both markets moving in similar fashion over an extensive period of time.
Does this mean it is a good idea to buy Eurusd, every time we buy Gbpusd? Since they have such a good positive correlation, taking long positions on both markets would …
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Sveetlana avatar
Sveetlana 16 Jan.

great article!

Airmike avatar
Airmike 17 Jan.

nice article

sonjatrader avatar

congrats

lelipuzik avatar
lelipuzik 20 Jan.

good job!

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1/53
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By just knowing how smart money operate in the market you can gain an edge in the financial markets and no matter if you're a profitable trader or not, knowing the concept that I'm about to share with you in this article can give you more insights into the structure of the FX market.
The number one reason why you would want to know how smart money operate in the market is the ability to proper time the market. Timing the market is one of the greatest challenge that any trader can have. The capability to spot market turning points before they happen can yield higher risk-reward ratio. By having the ability to enter a trade as close as possible to the market turning point, you enjoy 3 major benefits:
  1. Low Risk: By entering as close as possible to the market turning price you can use small SL order, which in turns allows higher position size which will yield more profits but at the same time minimizing the losses.
  2. High Reward: Entering as close as possible to the market turning price will give you the possibility to catch the majority of the move.
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WallStreet6 avatar

Very interesting article! and good point with the DXY

marius24 avatar
marius24 26 Aug.

thank you for giving me a new idea in trading:)). Quite informative this article and yap the timing is everything in this risky environment.

Berkeley avatar
Berkeley 26 Aug.

good work as ever ;)

Daytrader21 avatar

marius24 Yes you're right if we can figure out how to perfectly time the market we as traders can be far ahead.

Daytrader21 avatar

Berkeley Thanks.

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34/58
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Many traders that are using technical analysis for their forex strategies are focusing primarily on singles they are giving. But there are also hidden signals in some indicators such as: MACD, RSI, Stochastic, Momentum, and other oscillators. These hidden signals are called divergences. Divergence is one of the most impressive techniques in technical analysis. In forecasting currency movements the more advanced traders are paying much attention to it. Amazing results can be achieved trough to it. The divergence is characterized by the gap between the chart and the indicators, or more precisely the direction of movement of the price and the indicator.
In the last years, more and more traders are paying attention to the divergence. In combination with other techniques can be achieved amazing results and profits.
Divergence Itself gives us clarity of an impending change in the trend or a continuation of the trend. There are two main types of divergences: normal (bullish or bearish) and hidden (bullish or bearish)Normal (negative) divergence:
Bullish divergence - in this type of divergence as it is seen from the chart. Price draws two bottoms, the second is lower than the first, b…
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WallStreet6 avatar

Very interesting!

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2/46
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VictoriaVika avatar

Insightful - very well done!  Keep up the good work :)

Airmike avatar
Airmike 9 Mar.

wow.  very nice statistical sample :)

MobNaga avatar
MobNaga 10 Mar.

thank you, Airmike, anna_t, and VV!!
Be honestly, this research is not for the the one-month or one-year wonder strategy. If you want to design such strategy as like as the pure gambling strategy for the high-rate currency pairs, you don't need this articles, all you need is the luck :))

Olga18375 avatar
Olga18375 11 Mar.

Good luck!! And useful article!! Well done

Likerty avatar
Likerty 25 Mar.

I wrote a series of articles some time ago about why traditional tech analysis tools are doomed to fail.. And these comonly accepted indicators, like RSI, MACD, ichimoku etc.. are just useless.. Its rather a distraction from all the info, that Price action on itself gives..

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12/40
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In this presentation I would like to show one simple way to recognize profitable trades, and eventually avoid some mistakes done because of lack in patience and/or wrong beliefs. I will try to make it as much clean as possible so to be used and or tested by anyone who reads. Of course, a base knowledge about price behavior and price action between supply/demand areas is much welcome. Timeframe The strategy is developed in a combo of H4 and M15. Reading price fluctuations in H4 is quite comfortable, and you are not required to stay glued on the monitor the whole day/night. Furthermore, opportunities become great when reading them in the 15minutes to reduce the risk. Indicator I am using the RVI indicator. In the image below you see how to apply it to a Jforex chart: The indicator measures the energy (vigor) of a move (R.V.I. = Relative Vigor Index) by comparing the close price with open, relatively to its range. Basically, what you expect is the indicator to rise in a bullish trend because the closing of a candle is higher than the opening and opposite in bearish trends. So when the energy (vigor) starts to decrease, could be signaling an imminent shift in trend, which actually is …
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SpecialFX avatar

Forgot to add something, with leading indicators you are trying to predict what the price will do next, with lagging indicators you are reacting to what the price is doing now, or did a while ago. Both approaches can be correct or wrong, but I prefer to react because it's factual, while predicting has a much higher degree of uncertainty. Besides, I suck at predictions anyway :)

scramble avatar
scramble 1 Apr.

eh, we could just write a whole book about this matter, find some solutions, and then the following week some will have different views in another whole book. and both being true! :D in my opinion there is no way to elaborate past data in order to predict future events! what we can do, whatever strategy we use, is just calculate statisctics till last closed candle, and go for the more probable future develop. but this is already an huge cut in % of success! and here comes the environment for money management :)

scramble avatar
scramble 1 Apr.

actually as mentioned in the article, i'm developing a much difficult step to expose this "strategy" to worst cases and understand what happens. a kind of "crash test" which is really showing me some important arrangements. so still lot of work, but i like the way it's growing :) hopefully i'll be ready for next week.

doctortyby avatar

@ Special Fx, very interesting comment regarding Lagging and Leading indicators...

doctortyby avatar

@ Scramble prepare for the worst and you'll get the best of it :)

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7/40
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Introduction Stochastic Oscillator is a highly useful indicator. This indicator shows the relationship of the current closing price to its price range over a period of time. The indicator was developed in the late 1950s by George C. Lane, the president of Investment Educators Inc. The purpose of the Stochastic Oscillator – to identify price trends and reversals by tracking the position of closing prices within the recent series of highs and lows. Stochastic is constructed on the basis of the following regularity of the market price behaviour: at the uptrend, closing prices tend to the top of the price range, and at the downtrend – to the bottom, respectively. Stochastic was originally designed for market trading in a flat state; thus, it, like other types of Oscillators, functions quite well in the absence of any trend. Trend movements use the difference between the trend of the price chart and the indicator as a signal of a possible adjustment or reversal. Stochastic Formula Stochastic Oscillator consists of two lines – fast, %K, and slow, %D, and is displayed in a separate window under the price chart. Since the indicator is calculated as a percentage, with a fluctuations range…
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vega2552 avatar
vega2552 19 Mar.

Thanks.

egidijus avatar
egidijus 27 Mar.

Good article! I like the Stochastic oscillator.

Efegen avatar
Efegen 28 Mar.

I read it again it gave me plentifull ideas.thanks:)

SpecialFX avatar
SpecialFX 29 Mar.

I have to confess that I'm not a big fan of stochastics, as I have comments in previous articles from other members, in my opinion it used to be very useful back when it was created (70s I think?), but not so much anymore. Anyway, this article explains very well its capabilities :)

Delossan avatar
Delossan 31 Mar.

I do never base a trade on indicators but stochastics helps. +

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13/35
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The Moving average convergence divergence (MACD) indicator, which was fist created by Gerald Appel in 1960s (DailyForex,2012), has been classified as a momentum indicator and is a valuable and popular implement for Forex traders. MACD shows the relationship between moving averages of two different prices and is calculated by deducting the 26-day exponential moving average (EMA) from the 12-day exponential moving average (EMA) which Closing prices are used for these moving averages. In addition, a 9-day EMA of the MACD Line acts as a signal line and identifies turns. MACD can be applied to daily, weekly, or monthly Forex charts (investopedia, 2012) The MACD Histogram represents the difference between MACD and its 9-day EMA, the Signal line. The histogram is positive when the MACD Line is above its Signal line and negative when the MACD Line is below its Signal line. This indicator can be formulated as following: MACD = Short Term EMA - Long Term EMA MACD Line: (12 day EMA) – (26 day EMA) Signal Line: 9-day EMA of MACD Line MACD Histogram: MACD Line - Signal Line There are four general methods used to interpret the MACD as following: 1. Signal Line Crossovers Signal l…
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scramble avatar
scramble 14 Sep.

I used a lot this indicator in the past. You exposed it very well! Well done!

captain avatar
captain 24 Sep.

As is the case with most oscillators, MACD is best used in the context of prevailing trend.

alifari avatar
alifari 24 Sep.

MACD is a powerful indicator, if used in conjunction with support/resistance & supply/demand

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16/43
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                                                                                                                                                         Strategy:
1. Use 1h, 4h  or higher any currency pair timeframe.2. Do orders in the tops or in the bottoms, not in the middle of the price!3. Look for available profit - is it worth for doing trade?4. Think about stoploss - is it not too big.5. Be higher timeframe trend follower - chance to win are bigger ant tp - much bigger!6. If you are not shure, never do trade! Forex is  waiting, not doing a lot of orders. Here is not a   place for your emotions. My account started to grow  when I started to wait for only the best patterns.7. Allow market to show, when you must trade!                                                                              Indicators1. MACD with fast EMA12, slow EMA26 and signal EMA 92. Stochastic ossciliator  with settings: %K period 5, %D period - 3, slowing - 53. Candles                                                                             The entry.1. Identify divergence.2. For entry  use a drawn trendline (when the candle closes lower or higher trendline), nice candle (pinbar, evening…
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belman avatar
belman 20 July

Good article, very refreshing +1

tntalwar avatar
tntalwar 23 July

Nice.

OneGoodTrade avatar

A very mathematical aproach. Well done.

adask avatar
adask 30 July

All these oscillators are too lagging. So it will work only on certain market conditions. There will be large strikes of losers.

projectx44 avatar

Forex community thinks that the graph made it easier to understand.....http://www.fxcommunity.com

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11/68
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My strategy is based on the study of the psychological levels of prices. Double and triple zero are very important, also the central level. These numbers are used by professionals. Market entry, take profit and stop loss are placed in these areas.Examples GBPUSD are: 1.6100 (double) - 1.6050 (central) - 1.6000 (triple)When the market is rising up I watch the price behavior in psychological levels, seeking to reverse patterns to enter the exact point where the market will fall.So when the market is falling down I'm looking for reversal patterns in the psychological areas. They are the best places to enter the market rally.The essence: "sell high and buy low."I use two timeframes. One major to look for patterns (H4) and minor (M15) to enter the trade.My indicators are:RSI 10 applied to close.Used to look for divergences. Also out of position when in overbought or oversold.Exponential moving average of 200 applied to close.Useful in daily charts to follow the trend. In the lower timeframes also very useful if the market is in trend.Bollinger band period 20, deviation 2 applied to close.I use it to exit the trade and see the price range. Also used to see volatility.And most importantly…
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PokerPro avatar
PokerPro 4 Apr.

tcanuto: I trade the strategy for 1 year. The monthly profitability depends on your style of trader. If you trade in the medium term win many pips if the trend becomes stronger. There are several successful operations with this method.
In intraday you can earn an average of 30 to 50 pips operating a single instrument. You just have to find the setup in different currency pairs. Try them for 1 month. Regards

PokerPro avatar
PokerPro 4 Apr.

MrSami remove ema 200 and Bollinger band. You can have the same result using price action and psychological levels. I feel comfortable with them. Regards

CASPI avatar
CASPI 4 Apr.

Useful information. Good luck.

MrSami avatar
MrSami 7 Apr.

After reading twice your article, I should say that the problem is understanding a low is real low, a high is a real high. If estimates are wrong it will harmfull...

PokerPro avatar
PokerPro 9 Apr.

Hi MrSami, look at GBPUSD "M5" today (04.09.2012), the beautiful divergence 1.5850. I closed +30 pips, the rest to BE. It's simple, you should find the setup, not to guess if the high is real or not. regards

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