1. Divergence MACD MetaTrader 4
Indicator
Divergence is strong technical signal. In combination with trend indicators (MA) it can give you
profitable trading system. I usually trade divergences in the direction of main trend. To truly use
MACD, you will need a trending indicator as well. Trading lagging indicators can fail if a trend
is over extended. I’ve met many traders that have made the mistake of trading based off of
divergence only to lose profit on a trade.
In general, if you combine divergence and some other indicators, and you should never loose.
A trader figures a security is due for a retracement because MACD or Stoch show price in the
overbought/oversold area. So, the trader places a sell in the overbought area expecting the
price to come down. But it doesn’t. Instead the trend continues upward all the while, MACD/
Stoch showing divergence is over due. Trader is losing money waiting for a retracement
because he/she put way to much stock in trading divergence.
Divergence is a superb pchycological indicator for any varying market however in a trending
market, it’ll always fail. So for divergence traders to safeguard themselves from MACD/Stoch
short comings … might opt for a trending/leading indicator (momentum, rsi, parabolic, etc) to go
with the lagging indicators.
Download Divergence MACD MT4 Indicator