Free Day Trading Articles
Day Trading
 Trade juice Directory
 Trade juice - Home
 Top Books
 Course Reviews
 Education
 Freebies
 Article Weblog
 Hot Tips Newsletter
 
 Trading For Beginners
 Candlestick Charting
 Commodities
 Elliott Wave
 Emini
 Fibonacci
 Forex
 Futures
 Hedge Funds
 Mental Training
 Money Management
 Options
 Penny Stocks
 Risk Arbitrage
 Spread Betting
 Stock Market
 Swing Trading
 Systems
 Technical Analysis
 Trader Taxes
 Trading Strategy
 Trend Trading
 Gold & Oil
 
 Brokers
 Forums
 Weblogs
 Newsletters
 Submit an Article
 Links
 Link to Tradejuice.com
 Contact Us
 

How To Trade MACD Divergence


 

 

Personally, I love the MACD indicator because of its reliability and its ability to work well with other indicators to form a trading strategy. In my previous posts, I have gone through how you can make use of forex MACD indicator in your trading and how you can trade MACD crossover for profit.

In this post, I will go through how I actually trade with MACD divergence and how you can make use of it to form a trading strategy for yourself. If you are not sure about what divergence is, you can look at my previous post "Forex MACD Indicator Explained" and I will now go through the steps on how you can profit from the divergence.


The MACD divergence is a very powerful phenomenon that you can trade with. However you need to understand that the divergence works well only when there is a trend as MACD divergence is an indication of a upcoming reversal.

Here are how I trade the divergence myself:

Step 1: You have to make sure that there is a trend in action for the currency pairs you are trading. The best way to identify a trend is to use several moving averages. First, you plot a 20 EMA, 50 EMA and a 100 EMA moving average and see if they are stacked nicely in a nice manner. If they are stacked nicely with good angle and separation, it is a good indication of a trending market and if the EMAs are flat and mixed, there is no trend in the market.

forex/stock/gold/oil trading

Step 2: Observe the MACD and the price to look for divergence.

forex/stock/gold/oil trading

Step 3: Look for good reversal candle patterns like railway track, hammer and hanging man.

forex/stock/gold/oil trading

Step 4: Draw a trend line and wait for breakout.

forex/stock/gold/oil trading

Some of you may think that how can it be so simple? In fact, the most profitable trading strategy is one that is simple and not sophisticated.

---

Kelvin is basically a full time forex trader. Before getting into the field of forex trading, he used to work as a process engineer in a multinational company. he was introduced to this field by one of his friend who had also quit from day job to be a full time trader today.

Please visit my website for more information.

E-Mail: forexkel@forexindicator.org
Website: http://www.forexindicator.org

This article is intended solely for information purposes. The opinions are those of the author only. Please conduct further research and consult your financial advisor before making any investment/trading decision. No responsibility can be accepted for losses that may result as a consequence of trading on the basis of this analysis.

Information, charts or examples contained in this lesson are for illustration and educational purposes only. It should not be considered as advice or a recommendation to buy or sell any security or financial instrument. We do not and cannot offer investment advice. For further information please read our disclaimer.

 




Search
Tradejuice



TradeJuice
Web

Google image
 
 
© Tradejuice 2007 - Day Trading Articles