This has been overdue, I have a few trades I would like to go over and one in particular that was a great learning experience. I will start off with the trade I learned the most from.
Price had entered into a proven support and was also at 1.11500 level. As you can see price and RSI are doing two different things which means its time to look for a reversal candlestick. So I found one and jumped in.....and then nothing happened. So Fridays are different then any other trading day and the reason is after London close the markets are done...they are whisper quiet! As you can see I entered the trade right around London close and the market went sideways. Now one rule I have is never ever leave trades open over the weekend. Why? Anything can happen over the weekend that can affect where price opens on Sunday night. I have no control over where price can/will open on Sunday. So being that there was no trading volume due to the time and that Friday was almost over I pulled my trade for a loss. Learning lesson, do not open trades after London close on Friday.
Yesterdays trading day was a slow one for divergence traders. There wasnt much on the table for us but I managed to still find a spot for a small scalp.
I kept a close watch on USD/CAD yesterday pending oil news. After USD oil news was released this pair had some volume and created opportunity. As you can see around the 1.30000 area RSI printed divergence and price action created a long lower shadow or hammer (candlestick highlighted) whichever you want to call it. This is a bearish candlestick and with divergence printing and price being at a round number I jumped in with a sell. Fortunately price moved quick and came within 5 pips of my TP. I had to manually close the trade once I realized price was going to make quick turnaround. So I got out of this trade with a small profit.
At the end of the month I will post my results, stay positive my friends!
Yesterdays trading day was a perfect example of patience paying off. Sometimes the market doesn't produce optimal conditions to trade right away and we have to wait, that's okay. We will wait patiently until the market comes to us per our trading rules. The first trade I want to talk about is the GBP/CHF trade I took. Below is a picture of the entry and exit. I highlighted my entry in orange so you can see exactly where I entered the trade.
As we can see price had been falling pretty much all of the days trading session. I was watching this pair closely along with a few others to spot any hints of exhaustion. Typically when price is falling this steep you will find exhaustion around support areas. As you can see price actually pushed into a verified support before it exhausted. Once the RSI was below the 30 level and price started to exhaust in the support area I start looking at price action for clues to if the market is truly about to let up. We can see on the hourly chart that a pinbar candlestick has printed in the support area, pinbars are one of my favorite clues for trend reversal. I entered the trade set my SL and TP, an hour after I entered the trade ANOTHER pinbar printed! Two pinbars in a row is like the holy grail, I cant remember the last time I have lost a trade when this scenario has happened. And just like that the market took off in the opposite direction, my tp was hit pretty easily and could have even bagged more pips if held longer. No big deal, I made a trade and stuck to my plan and was a winner, cant ask for anything more.
The second trade I want to talk about is a EUR/CAD trade I took.
This here is a Regular Divergence trade setup. I want to explain why I didn't hold out longer to actually bag some more pips. I have trading rules and one of my rules is do not trade after the London close. This trade was taken before the London close but it didn't reverse until the London close. There just isn't enough trading volume after the London close to be interested in being in the market. Now as price moved past my entry and back into the positive area I found small support on the lower time frames and exited the trade with a small profit. Yes this was a valid trade setup all around and would enter the trade every time but the one thing we cant count on is how long the market is going to take to join our side of the trade. Nevertheless I just wanted to show you a divergence setup and and exit based off of trading hour rules. Stick to your game plan and do not deviate from it, its how we stay consistent.
Thank you for reading and stay tuned my friends,
I am excited to start this new journey teaching everything I know about divergence. I will have to say that through my years of trading that divergence has been the catalyst in becoming a successful trader. I know the ups and downs of the market and with that brings ups and downs in trading. If you are beginner I want to help you avoid the pitfalls and traps in trading. If you are not a beginner but still trying to figure out how to be profitable I want to show you step by step how to become a profitable trader.
In the next few blogs I will post a step by step guide on how to look for trade setups, how to understand structure, how to identify areas of importance and how to take advantage of them by using divergence. At the end of the guide I can guarantee that you will be a better trader, you will understand the market better and you will be on your way to becoming a profitable trader. Stay tuned!