The most common opinion is to cancel

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Then there was a normal positive divergence and the long entry was made. The signal to close the position at overbought levels came only in June (green circles). As a result of this small test, we can conclude that such a strategy has the right to exist, but due to the early exit of the transaction there is a risk of missing a strong move. In fact, catching every move is a "Golden Grail" dream. If the strategy shows stable performance, without deep drawdowns, it already deserves attention! Try to follow this algorithm and improve the strategy. Try it yourself, risk-free and without registration on the LiteFinance platform with new settings and other oscillators, such as АО.

Principle of accumulation of divergences When working with indicators such as MACD, you may have noticed more than once that the indicator, issuing a divergence signal, does not Peru Mobile Number List  reach it, but vice versa, forms another maximum or minimum.  such a signal due to an error in the readings, and close the position. However, it often happens that the divergence is not canceled, but rather postponed to another time. In other words, the signal accumulates. Why does that happen? It's very simple! Usually, we evaluate the divergence not in the entire current trend, but only in its part. In other words, our initial signal means a local trend change within the global stock.



This local trend change is called a correction. Therefore, the indicator indicates that there is a divergence at the time of the beginning of the formation of the correction, and after the correction, when the main trend continues, the indicator quickly understands its error and without passing through line 0, begins to move for the price. When this trend is concluded, the indicator issues a divergence signal again, which is now, as if within the previous signal. And now, it is already a unique sign. This may continue until the global trend changes. LiteFinance: What is Forex Divergence?  Divergence and convergence: theory and practice of application |  Litefinance In the chart above, we return to our trading.