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THE MOST
POWERFUL
TRADING STRATEGY
IN
TECHNICAL ANALYSIS
PROVEN STRATEGY TO HELP YOU TO MAKE PROFIT FROM FOREX TRADING
RICO.F.Y
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TABLE OF CONTENT 1 Table of Content 2 Legal and Disclaimer 3 Preface 4 Traders Mindset 5 Money Management Techniques 6 Introduction to Divergence 8 Instructions 9 How to Trade Bearish Divergences 12 How to Trade Bullish Divergences 15 Examples of Trading 19 Conclusion
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LEGAL : No part of this publication may be reproduced, stored in a retrieval
system, or transmitted in any form or by any means without the prior written
permission of the copyright owner.
DISCLAIMER OF WARRANTY : while the author has used his best efforts in preparing
this e-book, he makes no representations or warranties in respect to the accuracy or
completeness of the contents. The advice and strategies contained herein may not be
appropriate for your situation. You should consult with a professional where
appropriate. The author shall not be responsible for any loss.
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Preface
Dear friends, thanks for download this e-book. First, I want to congratulate you, you
have chose this e-book, meaning you are a step ahead into a better trade. I spent
time to writing this e-book for you and all of the contents here are from my own
experiences in trading Forex.
Im a full time trader, I watch the market everyday. I found that trading divergence
is one of the best trading strategy! For me, trading divergence is my secret weapon
in trading Forex.
So, what now ?
Well, choose the strongest trading strategy !
But what is the strongest trading strategy ??
Im glad you ask because I know the answer. It is trading DIVERGENCE.
Successful traders out there already claim that DIVERGENCE is the best trading
strategy because its the strongest signal in technical analysis.
Note : keep in mind that trading IS NOT ONLY about the strategy you use, but your
MINDSET and MONEY MANAGEMENT these are key when you start to trade.
Visit my website www.daytradingboss.com to get Forex daily analysis
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TRADERS MINDSET
You must keep in mind that even with tested and profitable systems, you
still could have numerous losses in row. Being aware that this can and
will eventually occur can prepare you to control risk and not abandon
your trading system.
This confidence is an important mindset that you must develop in order
to be consistently profitable.
Here is a partial list of the traits you should develop :
Keep calm when trading
Focus on the present market
Absence of anger
Enjoy the process
Trade your plan and plan your trade
Dont feel victimized by the market
Take full responsibility for all trading results
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PROVEN MONEY MANAGEMENT TECHNIQUES
These are simple points to remember, but they all can make difference :
Always and always use stop loss
Never trade more than a 3% of your trading account size on any
given trade
Always trade with money you can afford to lose
Never trade with borrowed money
Stick to one trading strategy, do not change it everytime.
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What is Divergence ?
Divergence is the indication that an end to the current trend may be near
and occurs when the price of a security diverges from a value of technical indicator.
A bullish divergence occurs when a technical indicators is making new highs while
prices fail to reach new highs. A bearish divergence occurs when a technical
indicator is making new lows while prices fail to reach new lows. Both of these
divergences are most significant when they occur at relatively overbought/oversold
levels.
Here is example of bullish divergence :
As you can see on the chart (point A and B) price making a lower low, but indicator
(point 1 and 2) making a higher low. Price going up. This is BULLISH
DIVERGENCE.
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Here is example of bearish divergence : As you can see on the chart (point A and B) price making a higher high, but
indicator (point 1 and 2) making a lower high. Price going down. This is BEARISH
DIVERGENCE.
So you know what is divergence now. Its time to make money from it. Lets go !
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I believe that there is a power in simplicity, meaning the more simple it is, the better
we can trade. I found some traders using more than 5 indicators on their screen ,
some of them using 10 indicators ! Can you imagine how difficult and complicated it
is to see your own screen with those indicators ? So,simple is better.
Ok, open your Metatrader (I assume all of you can use Metatrader and know how
to add indicators) and follow these instructions :
1. Open any chart you want, example GBPUSD pair on 5 minute chart.
2. Use MACD indicator. Set to 5,34,1.
3. Use Stochastic Oscillator. Set to 30,10,10.
Here is an example screen : The colour of the screen and indicators have been changed. So dont panic if your
screen is not the same. Just adjust your screen using the most suitable way. The
most important things are you open the chart on M5 chart, use MACD (5,34,1) and
Stochastic Oscillator (30,10,10). Thats all.
Note : I didnt invent this strategy, I read some books and other sources, making
some adjustments and changes to it.
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How to trade bearish divergence :
1. Look for bearish divergence on MACD, after that you should confirm found
divergence on Stochastic Oscillator. Make sure both MACD and Stochastic are
divergences.
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2. Create a trend line on the price chart. Wait until breakout price. 10
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3. Check Stochastic Oscillator. Look for crossover on Stochastic Oscillator.
Stochastic Oscillator is going down. Enter trade. Set take profit 15 pips and
stop loss 20 pips.
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How to trade bullish divergence :
1. Look for bullish divergence on MACD, after that you should confirm found
divergence on Stochastic Oscillator. Make sure both MACD and Stochastic are
divergences.
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2. Create a trend line on the price chart. Wait until breakout price.
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3. Check Stochastic Oscillator. Look for crossover on Stochastic Oscillator.
Stochastic Oscillator is going up. Enter trade. Set take profit 15 pips and stop
loss 20 pips.
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Here are examples from my divergence trading : 15
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So what do you think ? Its pretty simple, isnt it ?
Remember, DISCIPLINE ! There is nothing more important than being disciplined.
Just wait for indicators to show divergence, wait for breakout price and crossover
from Stochastic to enter trade. Always set stop loss ! For this strategy, set stop loss
20 pips and set take profit 15 pips.
NOTE : You can use this strategy for all time frames. The bigger
time frame you use, the better signal produced but less frequently. If
you use bigger time frame, means larger stop loss and larger profit
target. Just make sure you have good money management.
Thank you all. I hope you will trade better with this strategy. If you have something
to ask, please email me : [email protected] .
Good luck !
www.daytradingboss.com
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