High reliable divergence methodology of

When I was thinking about this approach, I was thinking specifically about the lack of discipline among most traders I've been around for a few years, who have a variety of entry points but only few and inconsistent exit points. This is a method that was taught and refined over several months, fourteen times in total.

First of all, I must say that this approach implies the presence of divergence in one of three indicators: Color Stochastic, Oscillator Moving Average and Commodity Channel Index. The reason I use three indicators is that sometimes, after losing some momentum, after bouncing off support/resistance levels, one of the indicators won't show divergence and I don't need market dead time, in other words, a waste of time.

Second, we need to draw a trend line on the chart and watch for the eventual change in momentum or reversal of trend.

The next tool will be Fibonacci extensions, which are a very useful tool for our approach to allocating profit targets. Later I will explain the purpose of this tool, as I will explain the entries for each situation, regarding the occurrence of a certain type of divergence, which will trigger a specified number of lots.

I will provide some basic steps to enter a trade as follows:

1. Identify the high/low points at which we measure the difference



2. Measure whether there is a valid divergence and determine the lot size you want to trade





It is worth mentioning that in the case of hidden divergence, greater fluctuations can be provided, and the lot size will be 10 times larger than the classic type.

3. Draw high/low divergence and trend line (if divergence exists)



4. Plot the next support or resistance level and its price level in the future



5. Create a stop loss below the low or above the high (spread + 1 pip) and plot Fibonacci extensions using two values ​​on the low/high where we measured the divergence and another value on the last significant high/low



6. Wait for the trendline to expire and enter the trade (Figure 6).



7. Transaction management.

When the price hits the first support/resistance in that particular case, the stop loss will move 1 pip in the positive zone. If the price continues to fluctuate and hits the targets one by one, we will close 1/3 of the remaining lots on each lot.

Suppose we open a position of 0.9 lots, and at Fe 61.8 we will close the position of 0.3 lots. At the next target price Fe 100.0 we will close the position 0.2 from the remaining lots and so on. If one of the targets is hit and the lot cannot be closed 1/3 (33.3% away from it), we can close the position as close as possible to 1/3, we will calculate the difference that cannot be closed and move the stop loss from +1 pip to cover this difference.

Also, if target three has been reached and we still have lots remaining, say 0.1 lots, we switch to a larger timeframe, in our case 4 hours, since we are on the 1 hour timeframe and wait for the same situation to arise, divergences and other steps to appear. If the divergence already exists and the first target price is higher than the third target price 1 hour later (our case), if we are unable to close another 1/3 of the trade, we will take this into account and will enter at the target price.

Additionally, we will cover the eventual negative swap by moving the stop loss and locking in more profits.