Forex trading system "CCI Divergence Trading"
Added: 2010-09-14 10:46:27 by Dexter
Trading system based on divergence trading method
Divergence is a useful tool for finding price reversal points from support and resistance zones. It usually gives us a relatively early signals compared to those given by moving average indicators. It can be successfully applied to many technical indicators and end up with good results.
This system makes use of two indicators. The first one is the Divergence indicator that will plot the divergence lines and the second one is the Bollinger Band. The Divergence indicator gives buy/sell signal according to the type of divergence that was detected. The indicator also is capable of drawing divergence lines for the whole history prices located within a specific chart.
Categories: Technical, Day Trading, Metatrader Only, Divergence
Timeframes: 5 Minutes
Currency pairs: ANY
Trading sessions: US Session (New York), European Session (London)
The entry rule is based on two indicators, namely the Divergence Indicator and the Bollinger Band. When the price is below the Bollinger band and the divergence indicator show an up arrow, we will open a buy trade. Vice versa, when the price is above the Bollinger band and the divergence indicator show a down arrow, we will open a sell trade as shown in the example below.
Once entered the market, we will need to set the Stop Loss to 20 pips and we close the trade in profit when the price touches the middle line of the Bollinger band.
The trade will exit once the price touches the middle line of the Bollinger band. As you can see in the picture below, we close the sell trade when the price touches the middle line of the Bollinger band as shown below.
Divergence is a useful tool that can gives us a relatively early signals compared to those given by moving average indicators. Combined with Bollinger Band, it can give up good results.
We need to follow the rules and wait patiently for the divergence and the Bollinger band to give us the signal.
Metatrader 4 chart template files