The Divergence Discretionary trading strategy is a good but quit complex trading system. Thus it is not recommended for use by forex beginners.
Fig.1. The Divergence Discretionary System.
This trading strategy is designed to be used on time frames that are higher than the 5 minutes time frame. Then it can be used to trade either the forex, futures, indices or commodities financial markets.
The Divergence Discretionary trading strategy utilizes a mixture of several indicators. The indicators are: divergence line, stochastic divergence line v1.0, Relative Strength index (RSI), FX5_MACD_Divergence v1.1, FX5_Divergence (12, 26, 9), (current currency pair M5 time frame) Stochastic_Divergence (8, 3, 3) and Commodity Channel index (CCI).
The divergence line draws a divergence line on the main trading chart while the stochastic divergent line v1.0 draws also draws a line that can either be pink and solid or dotted or aqua.
The rest of the indicators which include the Relative Strength index (RSI), FX5_MACD_Divergence v1.1, FX5_Divergence (12, 26, 9), (current currency pair M5 time frame) Stochastic_Divergence (8, 3, 3) and Commodity Channel index (CCI) are all displayed on separate charts below the main trading chart.
The Relative Strength index (RSI) draws an oscillating line between two levels.
The FX5_MACD_Divergence v1.1 indicator draws two lines; one is pink and the other is blue in color and also generates green and red arrows. The red arrows points downwards while the green arrows points upwards.
The FX5_Divergence (12, 26, 9) indicator green and pink bars that oscillate about a center line. The green bars form on the upper side of the line while the pink bars form below the center line. It also generates red and green arrows. The red arrows point up while the green arrows point down.
The (current currency pair M5 time frame) Stochastic_Divergence (8, 3, 3) shows how the Stochastic_Divergence (8, 3, 3) indicator would behave on a 5 minute time frame chart. It draws a blue and pink lines which oscillates and cross each other at various points. Then it also generates divergence lines. In addition, it also generates green and blue arrows. The blue arrows points up while the red arrows points down.
It comes with an already made template which incorporates all the indicators that are used in the trading system. If you take a quick glance at the template you will realize that it will require some bit of analysis before placing any order even if you are using the strategy. However, although it is quite involving, it is very rewarding with an efficiency of around 85%.
How to use the Divergence Discretionary trading strategy to trade.
Before trading sing this trading strategy, the trader should keep in mind that any signal that is generated by this trading strategy expires after the third candlestick.
Below are the basic rules that the trader should use to trade using this trading system without getting too much stressed by the many things that are displayed by the indicators that are used in the strategy.
- Divergence Discretionary System When to place a Buy
The trader should place a buy order when FX5_MACD_Divergence v1.1 green arrow is generated, FX5_Divergence (12, 26, 9) generates green arrow, (current currency pair M5 time frame) Stochastic_Divergence (8, 3, 3) generates a blue arrow and the CCI line is between the center and the lower line.
- Divergence Discretionary System When to place a Sell
The trader should place a sell order when FX5_MACD_Divergence v1.1 red arrow is generated, FX5_Divergence (12, 26, 9) generates red arrow, (current currency pair M5 time frame) Stochastic_Divergence (8, 3, 3) generates a red arrow and the CCI line is between the center and the lower line.
Fig.2. How to place orders using the Divergence Discretionary System.
Open demo account to test this system.
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