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Well, overwhelmed with the mail tonight! So I felt those intrested in
divergence type of trading, feel free to let me know, and I will do all I can
to spot them and let you know.
You must understand when one trades divergences on the hourly charts you
could be in the trade for 3 or more days. On the hourly charts I find
divergences occur only 2-3 times in anyone month. On the daily charts they
occur 2-3 times a year and on the weekly charts only 2-3 in 3 years. So your
not trading everyday for sure.
I am not an expert by far, divergences have been traded by many traders that
are probably far better than I. It is a well kept secret I have been trading
for 3 years, I heard about them, but never truely understood why and how they
occur, until the last two months someone was kind enough to share with me
those hidden jewels, that were in front of my face all this time.
The way I trade the divergences, and understand I like trading the type2
divergence over others because they are more reliable. If a market is in a 45
degree uptrend and I get a bearish divergence, I will not short against the
main trend, instead I will wait for the bearish correction and when it goes
up again, I will go long in that market, this is buying on the dips of a
uptrending market. Same goes true with a down trending market.
If the market levels out on the top making equal highs or higher highs and
the stochastics or whatever oscillator you enjoy using is making lower highs,
yes I would short the market with no reservations.
Bullish divergences in a downtrending market, will not be traded as I would
wait for the market to peak and start down and then I would short it.
Well there are no hard and fast rules, you trade how you trade, these are my
convictions, and it serves me well. You may have other methods and it may be
more profitable, if it aint broke do'nt fix it.
Have a good everning everyone
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