Divergence Petr Indicator For MT4
Table Of Contents:
- Divergence Petr Indicator For MT4
- Trading ideas with the Divergence Petr Indicator For MT4
- Divergence Petr Indicator For MT4 - Buy Entries
The Divergence Petr Indicator For MT4 provides a trader with the option to choose a Momentum Oscillator from a list of 30 indicators. This Oscillator is then used to automatically detect bullish and bearish divergences in price.
Trading ideas with the Divergence Petr Indicator For MT4
Divergence trading is one of the most powerful forms of trading in technical trading. It has proven time and time again that is a reliable method of analysis to unearth highly probable reversal trading opportunities.
In divergence trading there are usually two types of divergence trading. The one is known as regular divergence trading and the other is known as hidden divergence trading. Both of them are great technical patterns or structures but for this analysis, we will be focusing mainly on regular divergence.
Regular divergence has bearish and bullish divergence structures or patterns. To put things into a descriptive perspective we can describe bearish regular divergence as a price structure or pattern which sees price making higher highs whilst an oscillator or momentum oscillating indicator is making lower lows thus showing a loss of momentum in the buyer market, therefore, a reversal trade to the downside is most likely.
Of course, the direct opposite description applies to the bullish regular divergence definition. When the market is making lower lows then you will see your momentum oscillator indicator making higher highs which means that the bears are losing selling power thus resulting in a bullish reversal taking shape.
The regular divergence patterns occur quite frequently, however, to identify these patterns takes a trained-eye because you have to label your chart in a way that enables you to spot a divergence trade setup. With the use of this indicator, you need not have to worry about committing your time to such activities because through the help of this indicator the indicator will identify the divergence patterns for you.
The image below shows an example of a bullish regular divergence price structure.
Divergence Petr Indicator For MT4 - Buy Entries
The last image we saw that the market was in a regular bullish divergent phase therefore it would be ideal to position ourselves for a few buy trades.
If you were to look closer in the image below you will see that the market has retraced back down toward the second point of the divergence signal. This is advantageous to you because it gives us a better risk to reward ratio for our buy positions. Therefore, at this point, you can officially open your buy order. Remember, to set your take profit at least the same distance as your stop loss away from your entry. Your stop loss must be positioned or placed at the last swing low.
This signal came on the fifteen-minute time frame. This is a good time frame to use for this signal but if you are more detailed-driven then you can scroll down to the lower time frame which is the five-minute time frame, then you can time your entries better.
There is a triangle that is formed in the momentum oscillator. This triangle gives a frame of reference for us in terms of knowing when to buy and to sell. In this event, we are looking to buy because there's a bullish divergence pattern that was shown to us on the fifteen-minute time frame. Therefore, we have switched down to the lower time frame to time our entries more sweetly. So as you can see that the market did indeed break out the triangle to the upside.
This is one of the best invitations you will get to open a buy order so go ahead and do so whenever the market gives you such a brilliant opportunity. The great aspect about this trade is that we have the bullish confirmation from the higher time frame so you have the edge in this buy position but do not be greedy when you take this opportunity.
In this example you will notice that I used the relative strength Index indicator as my oscillator of choice. This works effectively well. However, you have more options. You can change the default settings so that you use a MACD for instance.
Using a MACD is also a fine choice given the credibility it has for such patterns. It was designed with this concept of divergence in mind so it is a great resource to have when using it for such purposes.
You could also follow the same sequence of analysis I did using the top down approach whereby I confirm the divergence pattern on one time frame then switch down to the lower time frame to gain entry signals. Doing so gives you an edge in the market because you are able to time your entry with precision. However, this is not altogether necessary.
If you see a divergent price structure on one time frame then you can trade that pattern on the time frame in which the divergence was identified in.
It just shows the power of this indicator because it does not limit you. You have plenty of options available to you - therefore find the settings that speaks best to your strategy.