Stock Trading With Divergence on MT4 MT5 Download
Divergence Stock Trading Setup is one of the trade setups used by Stock traders. It involves looking at a stock chart and one more stock indicator. For our example we shall use the MACDstock technical indicator.
To spot this stocks divergence setup find two chart points at which stocks price makes a new swing high or a new swing low but the MACD indicator does not, indicating a divergence between stocks price & momentum.
To look for divergence stocks setup we look for two chart points, two highs that form an M-shape on the stock chart or two lows that form a W-Shape on the stocks chart. Then look for the same M-shape or W-Shape on the stock indicator you use to trade.
Example of a Stock Divergence Setup Trade Setup:
In the stock chart below we spot two chart points, point A and point B (swing highs). These two chart points form an M-shape on the stock trading price chart.
Then using MACD technical indicator we check the highs made by MACD technical indicator, these are highs that are directly below Chart points A & B.
We then draw one line on the stock chart & another line on the MACD indicator.
Drawing Stock Divergence Lines
The stock chart above shows an example of one of the four types of stocks trading divergence setups, the one stocks divergence setup above is known as hidden bearish stocks divergence setup, one of the best type to trade. Types of stock trading divergences are covered in the next learn stock guide lesson.
How to spot stocks trading divergence setups
In order to spot Stock Trading divergence signal we look for following:
- HH=Higher High- two highs but the last one is higher
- LH= Lower High- two highs but the last one is lower
- HL=Higher Low- two lows but the last one is higher
- LL= Lower Low- two lows but the last one is lower
First let us look at the illustrations of these stocks divergence trading terms:
M-shapes dealing with Stocks price Highs
W-Shapes dealing with Stock price lows
Example of M Shapes on Stocks Charts
Examples of W Shapes on Stock Charts
Now that you have learned the stocks divergence trading terms that are used to explain divergence stock setup. Let us look at the two types of divergences and how to trade these stock chart setups.
There two types are:
- Classic Divergence Stock Trading Setups
- Hidden Divergence Stock Trading Setups
These two set ups are described on following guides below
Classic Divergence Stock Trading Setup
Hidden Divergence Stock Trading Setup
Stock Trading With Divergence on MT4 MT5 Download - Stock Trading With Divergence on MT4 MT5 Stock Trading Platform PDF Free Download - MetaTrader 4 Stock Trading Platform MT5 Divergence Stock Tutorial.
