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Divergence Trading Strategy

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653K views|3 years ago
💫 Short Summary

The video provides a detailed guide on spotting divergences in day trading to increase success rates, focusing on regular and hidden divergences for profitable trades. It emphasizes using the RSI indicator and candlestick patterns to identify potential trend reversals and continuations. Traders are advised to set a risk to reward ratio of 1:2, take profits at specific targets, and avoid greed. The importance of analyzing divergences on different indices and using higher time frames for reliable results is highlighted. The video encourages viewers to rewatch for a comprehensive understanding and offers strategies for consistent profitability in trading.

✨ Highlights
📊 Transcript
Importance of spotting divergences in day trading for increased success rates.
00:17
Personal experiences shared of initial losses due to inability to spot divergences.
Focusing on spotting regular or hidden divergences led to profitable trading.
Detailed guide provided on entering trades based on divergences for high success probabilities.
Viewers guided on adjusting RSI settings on TradingView to enhance trading analysis.
Trading with RSI Indicator: Importance of Divergence
02:30
Regular bullish divergence signals a possible trend reversal, while regular bearish divergence indicates a potential downward movement.
Traders should wait for rejection candles, set stop losses, and maintain a risk to reward ratio of 1:2.
Profit should be taken at specific targets to ensure a risk-free trade, and greed should be avoided.
This strategy is especially beneficial for new traders to secure profits.
Hidden divergences in day trading.
06:15
Hidden bullish divergences involve price making higher lows and RSI making lower lows, indicating an uptrend.
Hidden bearish divergences involve price making lower highs and RSI making higher highs, suggesting a downtrend.
Traders can use these divergences to identify potential trend continuations or reversals.
Utilizing hidden divergences can help traders make informed decisions and improve their trading strategies for higher success rates.
Trading with a one to two risk to reward ratio can lead to potential profits.
07:49
Specific trade examples include gaining 36 pips on the Euro/Australian Dollar and 41 pips on the Australian Dollar/U.S. Dollar.
Analyzing divergences, especially bullish and bearish ones, on different indices is crucial.
Conducting analysis on higher time frames is recommended for more reliable results.
Avoiding false signals by waiting for confirmation and using trend lines for trend reversal trades is advised.
Importance of candlestick patterns in trading for recognizing trend reversals.
10:46
Rejection candles are emphasized as entry points in trading.
Price action and RSI indicators are highlighted for analysis.
Regular and hidden divergences are covered for a comprehensive understanding.
Viewers are encouraged to rewatch the video for full grasp of the strategy and potential success.