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MACD Indicator for Spotting Divergence




Full Transcript

Best Divergence Indicator For Day Trading

What are the best indicators for day trading futures? Today’s quick lesson for ninja traders is divergence. What exactly is divergence? So divergence is one of my absolute favorite tools that I use.

I am a very conservative trader, so I stay really keen to any sort of indication the market is going to tell me. So here we are. Alright, so this red line, this is my EMA – 52 period line.

This is my main area where I take all my trades from. So here it has been going down, right? The momentum was down and it totally shifted if blew up. And if you start to look at the MACD.

These are the two main indicators that I use. I work with them together. So here it goes up. It’s a strength going up. Now it’s showing me that it’s heading down.

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I would be probably in this trade right here because all the indications are great. You know, it change direction. There’s no divergence going in here. Right. So now it continues up. Now, look at where the pivot is right here. It’s much higher than the last pivot here. However, on the MACD.

On the MACD, there’s a serious divergence. Right. I will be staying away from the next time it hits my E and may line because not only am I a conservative trader, I’m also a scalper.

I like to go for the smaller profits, which makes it that I need to be in more highly probable trades. So look what happened here. Since I enter here, my stub is only about. Five ticks. So I would be right around here, right? My stop would be here. So if I entered here, look at that, I would have been stopped out. And for me, the main thing would have been to keep me out.

This is where divergence happens all the time since I am quite conservative. I like to listen to it and stay away because even if it retraces. Far enough, but not too far like this, probably for a longer time period. Trader is not a big deal for me. It is because my risk is so small. So that’s why I really love divergences. Here is another good example of divergence.

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Once again, the market was headed down. It went straight up here. All right. And now look at this. From this pivot to this pivot, we’re already developing divergence right there as it’s going down here. Yet it’s going up here.

Now I’m hitting a little bit of a double top, which means already a reversal pattern. And look at this mean divergence. And look what happens here.

Look at that huge retracement. So as I said to me, divergence is a really big indication that there is going to be a reversal in the market. How much? I cannot tell. But it’s certainly enough for me to know that it could stop me out. And in this case, in the end, my other case right here, I would have lost money. So it’s better to be safe than sorry.

MACD Indicator for Spotting Divergence

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MACD Indicator for Spotting Divergence