One thing that you cannot afford to get mixed up is this: Divergences are an indicator NOT a trade signal. It would be a bad idea to trade solely on the divergences that you believe that you see in the market. You would end up seeing too many false positives, and that could derail your trading in a big way.

You are never going to find a 100% completely foolproof solution to trading ever. If that existed, everyone would already be doing it, and there would be no way to profit in the markets. That said, there are ways to seek additional confirmation for the trades that you would like to make.

Something that you can do to increase the probability of a winning trade and decrease your chances of losing on a trade is to use additional confirmation tools while you are trading.

You may look for trend lines or a candlestick pattern that confirms that the reversal that you believe you see coming is truly coming down the line. Those types of patterns are extremely helpful in the sense that they will give you the best possible chance to confirm the divergence that you believe you see.

 


You can draw trend lines on your oscillator tools as well to see if there is important information contained within.

If you don’t know for sure which direction to trade, you may want to wait until market conditions change again and it becomes more apparent to you which way you need to go. The worst thing that you can do is try to trade when you are simply uncertain about what the market is doing or how you need to react to it. That is dangerous and could result in you losing a considerable amount of your money. Avoid the temptation.