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    Thread: My Divergence Strategy

    1. #1
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      Default My Divergence Strategy

      Hi fellow traders, my name is Zahid Mehmood and I am from Pakistan, I have been trading demo for 9 months. I am still demo trading because I am still learning, I donít have enough experience and also I am broke, I have no money to trade with. Thatís why I joined this community of traders so that I can not only share my limited knowledge to others but also I can gain more knowledge from experienced traders as well and by doing this I can earn bonus as well.

      So for the first 6 months, I was micro scalping on m1 and m5 chart, I was still good at it but there were two huge problems in micro scalping, first my risk to reward ratio was horrible and secondly I did not have a clue about overall trend, so I was trading against the trend and trust me this is not good at all for any trader.

      So I changed my approach towards the market and for the last three months, I have been trading higher time frames and spot setups on Daily, H4, H1 and M30 time frames but I always make an entry on M5 or M15 time frames which gives me great risk to reward ratio such as on Daily and H4 for swing trades with risk to reward ratio of 1:5 to 1:10 and H1 and M30 for intraday trades with risk to reward ratio of 1:2 to 1:3. So because I enter on M5 or M15 time frames, my stop loss is always around 15-20 pips.

      Now Iíll tell you guys shortly about my strategy, my primary setup for taking a trade is divergence and I use RSI (default settings) indicator although we can use Stochastic or MACD as well, but I like to take trades after multiple confirmations and for that I also take into consideration trend lines, TDI known as Trade Dynamic Index (combination of RSI and Bollinger Bands), and sometimes ABCD patterns as well. I know that mostly folks donít pay attention to divergence but believe me it is very powerful and profitable method.

      We should all have a realistic monthly goal in our minds and that is around 400-500 pips per month because big hedge fund companies and even banks have a target of 400-500 pips. Itís the quality that matters not the quantity.

      Iíll post my analysis so I am looking forward to improve my trading skills by learning from you guys as well and if you guys want me to explain Divergence strategy and its types in detail then please do tell me, Iíll edit and explain it in depth in my this post.

      Regards

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    4. #2
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      Default

      Welcome to the trading journal section mate, I'm sure you won't regret your decision to join this amazing section.

      Daily and H4 for swing trades with risk to reward ratio of 1:5 to 1:10
      This is interesting, since a trend on a daily chart last weeks and months, getting a reward of 10x relative to the risk would necessitate holding a trade for long periods. How long is your average holding period?

      I know that mostly folks donít pay attention to divergence but believe me it is very powerful and profitable method.
      It depends. I studied divergences excessively in the past, but gave up since my performance did not change much compared to trading without them. But they are indeed good confirmation tools.

      We should all have a realistic monthly goal in our minds and that is around 400-500 pips per month because big hedge fund companies and even banks have a target of 400-500 pips.
      What risk do you intend to take per pip? I gather your trade risk will be based on pip valuations rather than fixed risk percentage.


      Iíll post my analysis so I am looking forward to improve my trading skills by learning from you guys
      This is really a great place to post your views and discuss your thought processes with other forum members. Good luck on your trading

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      On Friday, I spotted a setup on EURNZD Daiily TF, it formed regular bearish divergence on Daily and also it is holding a nice daily channel as well, so as I said earlier I take entries on M5 or M15 TFs so in this case I found entry on M5, on m5 it was also forming regular bearish divergence so it gave me a chance to enter the market with 20 pips stop loss and my target will be around 350 pips because it is a daily TF setup, currently it is running in +100 pips and now my stop loss is on break even. So even if it hits my stop loss, I'll still enter in it again after few days because it has to fall.

      I am attaching 2 pictures, first is the daily TF setup and the second is the M5 TF setup as known as entry setup.




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      This is interesting, since a trend on a daily chart last weeks and months, getting a reward of 10x relative to the risk would necessitate holding a trade for long periods. How long is your average holding period?
      on daily TF, on highly volatile pairs such as GbpJpy, GbpNzd, EurNzd, the trade can last for 3-5 days but for slow pairs, it can last between 1-2 weeks, so that is my average holding period.


      What risk do you intend to take per pip? I gather your trade risk will be based on pip valuations rather than fixed risk percentage.
      My stop loss is always 15-20 pips because I always take entries on M5 or M15 so that can give me high risk to reward ratio so yes my risk is based on pip valuation.

      ---------- Post added at 06:03 PM ---------- Previous post was at 04:54 PM ----------

      ---------- Post added at 06:10 PM ---------- Previous post was at 06:03 PM ----------

      Sorry guys I don't know I copy and paste the picture url of my EurNzd analysis in insert image but its not uploaded, anyways I am copy pasting the direct links here.
      EurNzd Daily TF (Regular Bearish Divergence)
      https://postimg.org/image/qu81ei39h

      EurNzd M5 TF (Regular Divergence)
      https://postimg.org/image/l7boh10qt
      Last edited by zahidmehmood; 11-20-2017 at 07:08 PM.

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    10. #5
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      Default

      Hello bro Zahid! Welcome to this trading journal section. It is nice to see more people sharing their way of trading in this section. I do believe you can reach your target. Just keep practicing in demo account. Once you get your bonus money, trade with care okay?.

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    12. #6
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      Hello bro Zahid! Welcome to this trading journal section. It is nice to see more people sharing their way of trading in this section. I do believe you can reach your target. Just keep practicing in demo account. Once you get your bonus money, trade with care okay?.
      thanks brother for your kind words. I need this kind of motivation from senior members, I am trying to achieve around 500 pips on monthly and definitely I'll keep on practicing and with bonus money, hopefully I'll achieve my monthly target.

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      first of all welcome to the forum as well as in this Journal section bro. I don't know it is a coincidence or what but i was looking to a chart since yesterday and was confused about a RSI divergence. would to you take a look to the below image and explain about this divergence, although its negative and I was hoping a downtrend but bitcoins prices are running all time high. can you explain how exactly these divergences work?

      I'm not RANDOM you just can't think as FAST as me


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      I found another good setup (Regular Bearish Divergence) on GbpUsd on H1 TF few hours ago, also it was holding a nice channel on H1 TF so there was multiple confirmation as well, so I took entry on M5 TF in which it was also made nice Regular Bearish Divergence so now I am uploading both pictures, currently it is running in 40 pips profit and my take profit is 60 pips.

      https://postimg.org/image/k3w5it5hh

      https://postimg.org/image/tpppz3wn9

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      Welcome to this trading journal section zahid ,me though little surprised that on your preliminary posts you are starting with trading journal writing ,are u introduced by friends who knows the forum ? By the way your trading strategy is very good and effective and I wish good success

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      Gbpjpy is also currently in a channel if we look at H4 TF and looking for yet another fall of atleast 100 pips, also on M30 TF it has formed a nice hidden bearish divergence ans on M15 TF, it has formed rgular bearish divergence so I took entry on M15 TF with stop loss of 20 pips and target of 100 pips, below are all the 3 TFs pictures.

      https://postimg.org/image/ndakp9tl1

      https://postimg.org/image/z3t3kebr9

      https://postimg.org/image/b1c9piv45

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