Divergences, both hidden or normal gives me a better opportunity to win my trades. Personally I love to use MACD Histogram to detect the divergence and I need another kind of tool to confirm the divergence. MACD Histogram comes with signal line which can be used as divergence confirmation. Sometimes I use TDI (Trader Dynamic Index) to open my position along with the divergence shown by MACD Histogram. On the following example, I got about 28 dollar (4 lots with 9 pips TP).
I am a bit late to open my position if I use MACD signal line cross over (blue line cross over the red line from bottom). But, as you can see above, actually we can open BUY when TDI green line cross the red line from bottom. It's a good BUY setup because the following reasons:
- Hidden divergence spotted by MACD Histogram. See the white dotted lines on the price and indicator.
- MACD lines are above the zero line which means overall trend is up.
- TDI Crossover from the bottom (buy signal)
With these three confirmations, we can go LONG confidently. I usually put my take profit around 10-20 pips on M15 timeframe. But because I am use 4 lots, so I only take 10 pips on this trade.
See the result above, its floating profit 16 dollars. I close this trade on 28 dollar profit. Good enough for 1 position.
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