Can't trade in foreign exchange? You need to look at these 9 rules of foreign exchange trading

　　The only constant in the foreign exchange market is that prices are always changing.In the ever-changing market,there is no system that wants to be done once and for all,but through systematic learning,we can definitely improve our trading performance and correct our wrong trading concepts and methods.People who successfully make money in this market have one thing in common,that is:yes Learning never stops,good observation and rational use of rules.What I want to share with you today is all the rules about divergence trading.How to use divergence signals to find opportunities with high success rate?Before we look for potential divergence patterns,here are 9 rules for divergence trades to keep in mind.

　　We need to learn them,remember them,and use them to help us make better trading decisions.And once we ignore their existence,it may lead to our transactions getting worse and worse,and even the liquidation of personal accounts.I hope everyone pays attention to these nine rules.

　　1.Confirmation of deviation

　　In order to determine the formation of a divergence,the price needs to form one of the following patterns

　　The high is higher than the previous high

　　·The low is lower than the previous low

　　·Double top

　　·Double bottom

　　Before the above four situations appear,do not rush to observe the relevant technical indicators.If the price has not formed any of the above four patterns,you'd better not enter a divergence trade.If you insist on doing this,then you are just imagining it.In the trading market,only objectively following the market is the only magic weapon to make big money.

　　(The high point in Figure 1 is higher than the previous high point.At this time,you can pay attention to the trading opportunities brought by the divergence signal;while Figure 2 is obviously in a volatile market,and it is not suitable to use the divergence rule)

　　2.Draw lines to connect continuous tops or bottoms

　　Next we need to closely observe the recent movement of the price.Remember,you will only see four scenarios:a higher high,a high that is the same as the previous high,a lower low,or a low that is the same as the previous low.

　　Now,all we have to do is draw a line from the new high or new low,connecting the previous high or the previous low.The pattern formed by the price must be a series of major tops or bottoms.

　　3.Do the right thing-only draw continuous tops or bottoms

　　Once you see the price forming two swing highs,you connect the above top with a straight line;if you see the price forming two swing lows,connect the above bottom with a straight line.

　　When you see price forming a higher high,instead of trying to draw a line connecting the lows at the bottom,you should connect the two highs.

　　(Figure 1 connecting the highs of two peaks is a correct demonstration,and Figure 2 connecting the lows below the highs of two peaks is a wrong demonstration)

　　4.Pay attention to price trends

　　You've connected two consecutive tops or bottoms with a straight line,and you can now observe your usual indicators and compare them to price action.

　　No matter what metric you use,remember that you are comparing its top or bottom.Some indicators,such as the MACD indicator or the KD stochastic indicator,can draw multiple lines connecting highs or multiple lows in the same way.All you have to do is focus on the indicator that corresponds to the line connecting the top or bottom of the price.String.

　　(For example,the KD indicator,when the price rises to a high point,you need to pay attention to whether the trend of the indicator also has a new high)

　　5.Draw a line connecting the price and the indicator at the same time

　　If you draw a line connecting two highs,you must also draw a line connecting the two highs of the indicator.The same applies to the lows.If you draw a line connecting two lows,you must also draw a line connecting the two lows of the indicator.

　　(The high and low points of the price in Figure 1 correspond to the high and low points of the indicator are the correct drawing methods)

　　6.The high and low points of the price and the indicator are consistent

　　The high or low of the indicator must be aligned with the high or low of the price on the same vertical line.

　　7.Observe the trend of the inclined line

　　Divergence only occurs when the slash connecting the top/bottom of the indicator and the slash connecting the top/bottom of the price do not move in the same direction.A sloping line must be one of three:ascending,descending,or horizontal.

　　·If the price is on a rising slash and the indicator is on a falling slash,it means that the rally is deviating and there is a need for a pullback.

　　·If the price is on a downward slope and the indicator is on an upward slope,it means that the downward trend is deviating and there is a need for a rebound.

　　·If the price is on an upward or downward slope and the indicator is on a horizontal line,it means that the market is not strong enough,so be cautious about chasing up or down.

　　(In the pink line area in the figure,the price is on a falling slash and the indicator is on an upward slash,resulting in a downward trend and then rebounding;in the blue line area,the price is on a rising slash,and the indicator is on a horizontal line,resulting in a rally that deviates and then rebounds)

　　8.Once missed,wait for the next opportunity

　　If you've drawn a divergence pattern,but the price action has turned around and moved in the reversed direction for a while,then you've missed the opportunity to trade on the divergence.All you can do is wait for another range high/low to form and start your divergence hunt again.

　　9.Choose a long-term horizon for divergence trades

　　The longer the time frame,the more accurate the divergence signal from the graph.This means that you will trade fewer lots,but if you build your trading system well,your profits will be huge.Divergences appear more frequently on short time horizons,but are less credible.

　　We only recommend investors to trade divergences on 1-hour charts or longer timeframes.Other traders use 15 minute charts and even shorter time frame charts for divergence trades.Divergence trades on shorter timeframes,we will encounter too much noise,so it is best to stay away from divergence trades on too short timeframes.

　　If you are seriously considering trading with divergence patterns,you must keep the above 9 rules in mind and do not ignore the existence of these 9 rules.

　　If you follow these rules,the probability of you establishing a complete deviation trading system to obtain considerable profits will greatly increase.For more foreign exchange trading books,please lock the mutual market network.