11823, 9:59PM. Divergence trading In this lesson, we will cover divergence trading. Table of Contents L.Divergence trading 1.1.What is divergence trading? 1.2. Regular divergence 1.3.Hidden divergence ntps:facademystmo.comiessonldvergence-trading FTMO Academy sno11823, 9:59PM. FTMO Academy ver gueniee sui There is a popular saying in trading that all we have to do to be profitable is to buy low and sell high. Unfortunately, in real trading, things are rarely easy like that. Although we will hardly sell the absolute top or buy the absolute bottom, we can use divergences to spot possible reversals very early and also use them to manage our existing positions. Whatis divergence trading? The divergence can be spotted by comparing price action with different oscillators. When the market is going up, and the price is making a higher high or going down, the price makes a lower low, the indicator should also make her highs and lower lows. But when there is a divergence, we can see that an uptrend price is making higher highs, and the indicator is making lower lows. Same for a downtrend, the price is making lower lows, but the indicator is making higher highs. It is up to us what indicator we decide to use. The most popular ones are RSI, MACD or Stochastics. My yok Compared to indi ators such as moving averages or Bollinger Bands which are lagging indicators, divergences are considered a leading indicator. This means that we can catch ntps:facademystmo.comiessonldvergence-trading 210+1123, 9:69 PM FTMO Academy Itis great, but like anything in trading, divergence trading is not some hidden secret to the markets. We will often find out that divergences appear in strong trends, but the price is still going in one direction. This is why divergences are best to use once the market slows down after a strong directional move where we can spot a weakening momentum. There are two types of divergence: Regular and hidden. Regular divergence Regular divergences are used for possible trend reversals. There is a bullish and bearish regular divergence. can be spotted when the price makes lower lows, but the oscillator makes higher lows. This can be a possible signal of a downtrend reversal. As we can see in the example, a price makes lower lows that are not confirmed on the MACD indicator; therefore, we can look for a trend reversal. — : Opposite to that is a regular When the price is making higher highs, but the oscillator makes lower highs, we can spot the regular bearish divergence. This can be a nntpsifacademy.tme,convlessonidvergence-rading 310+1123, 9:69 PM FTMO Academy After spotting a regular divergence, we don't need to always jump right in the trade. More often than not, the better choice is to wait for other confirmations like watching a price action or technical indicators. Hidden divergence Compared to regular divergences, hidden divergence can signal possible trend reversals and a trend continuation. As trend trading can oftentimes be easier than trying to catch tops and bottoms, hidden divergence is a useful tool we can use. A hidden bullish divergence can be found in an uptrend. nntpsifacademy.tme,convlessonidvergence-rading+1123, 9:69 PM FTMO Academy We can spot a hidden bullish divergence when the price makes a higher low and the oscillator makes a lower low. Hidden bearish divergence is presented when the price makes a lower high and the oscillator makes a higher high. Here is the recap of what we learned in today’s lesson, as we can see on the table. hitpssfacademy.tmo.convless vavergence-trading si10+1123, 9:69 PM FTMO Academy Divergence Cheat Sheet Bearish TUT a) Regular Divergence Hidden Divergence Regular divergences are useful for trend reversals, and hidden divergences can signal trend continuation. It is always well advised to use other trading confluence tools rather than just trading these divergences blindly. We can use anything from indicators or price action. nntpsifacademy.tme,convlessonidvergence-rading 61011823, 9:59PM. FTMO Academy Lesson test The lesson questions are based on the knowledge that is acquired during a selected lesson. Some of the questions might have educational purposes and it might be harder to know the answers based on the lessons’ theory. This is due to the fact that the questions also act as educational material for the final exam. You have infinite attempts to pass each lesson. Question rules: All questions have multiple-choice responses. Therefore, one or more answers can be selected as correct. Most of the time only one answer is correct, however, you should still pay attention to multiple-choice possibilities. What are divergences not used for? To manage our existing positions. To provide a guarantee of success. To spot possible reversals. Regular divergences are useful for trend reversals, is that correct? Yes What is a bearish divergence in divergence trading? A signal that suggests a potential uptrend. A signal that suggests a market trend is about to continue. ntps:facademystmo.comiessonldvergence-trading 70116123, 9:59PM FTMO Academy A signal that suggests a potential downtrend. We have two types of divergence trading. What are they called? Visible and secret. Visible and hidden. Regular and hidden. Regular and secret. In what type of conditions is it better to use divergences? In sharp trends. In slow ranging markets. What is divergence trading? Itis a type of a trading strategy that buys low and sells high. ItIs a type of a trading strategy that uses technical indicators to identify market trends. Itis is a type of a trading strategy that identifies and exploits direction of price movement. Itis a type of a trading strategy that involves buying and holding an asset for a long period of time. ntps:facademystmo.comiessonldvergence-trading 81011823, 9:59PM. FTMO Academy Bullish divergences signal a potential uptrend. Bullish divergences signal a potential downtrend. submit support@ttmo.com +44 20 3322 2983 WhatsApp Contact options Privacy Policy Cookies 080000 ABOUT US Evaluation Process Trading Objectives Why our Challenge? Testimonials Sei 1g Plan Partners Affiliate Programme Terms & Conditions Careers ntps:facademystmo.comiessonldvergence-trading 910+1123, 9:69 PM FTMO Academy calendar Fantastic Modern Prop Trading Firm shop Account Metrix Account Analysis Statistical App Trading Journal Mentor App Equity Simulator Quick trade manager News Indicator Ctr ea Please note that FTMO does not guarantee the accuracy, completeness or timeliness of the content provided by this website. 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