In this post, I will discuss my forex divergence trading system for H1 timeframe. Basically I am a divergence system. I have the same system for scalping as well as swing trading. When I want to swing trade, I trade on H1 and H4 timeframe and when I want to scalp, I trade on the M15 timeframe. I also use this same system for trading important economic news releases like trading NFP Report. In future posts, I will show in detail how I use the same system for scalping plus how I use this same system for trading important economic news releases like the NFP report. Now before you proceed further, I want you to download these 2 PDFs FREE and go through them. These 2 PDFs explain in detail how to use Moving Averages and Candlestick Patterns in your trading plus how to identify Divergence Patterns. Since I use moving averages, candlestick patterns and divergences in system trading a lot, you should go through these 2 PDFs first before you read the rest of the post below. This time we will be trading on the H1 timeframe. Take a look at the following screenshot! H1 timeframe on 25th March. Trading and the Stochastic are showing bearish divergence while MACD is not showing any divergence. For our purpose divergence appearing on any two oscillators is a strong signal. So we start planning for a short trade. After spotting the bearish divergence on the H1 timeframe, we shift to the M15 timeframe in order to find a better entry. We draw a minor trendline on the M15 chart and wait for the price action to break it in the down direction. On M15, all the three oscillators are showing bearish divergence. The market top is at 1. After 10 candles the minor trendline is broken as is clear from the above screenshot. We enter into a short trade at 1. Our stop loss is at 1. If we had drawn the minor trendline on the H1 timeframe, our entry would have been around 1. So by using a lower timeframe, we have been able to reduce the risk by 23 pips. It is important for you to reduce the risk. Lower risk should always be preferrable. On H1 timeframe, try to keep risk lower than 20 pips. If you find an entry with a risk of more than 30 pips, just skip that trade. Now this is what we will be doing. We entered on a bearish divergence on H1 timeframe. We will continue in the trade as long as no bullish divergence appears on H1 timeframe. On H1 timeframe, an average market move can be from pips. So we expect to make at least pips. If we make pips, our reward to risk ratio will be 6. A trade on H1 timeframe can continue from days on average. So we continue in the trade. On 27th, after two days we spot a bullish divergence pattern forming on H1 timeframe. Take a look at the following screenshot. This time only the Stochastic Oscillator is showing a clear bullish divergence pattern. RSI is also showing divergence pattern but it is not very strong. When you spot a divergence pattern on anyone of the three oscillators, plan to exit the market. Take a look at the screenshot below! On M15, all the three oscillators are showing bullish divergence. So we have a strong signal to close the short trade. We close it at 1. We again draw a minor trendline on M15 timeframe and wait for the price action to break it. Price soon breaks the minor trendline and we go long at 1. Our stop loss is a few pips below the bottom at 1. So our risk for this long trade is 20 pips. On 29th I closed the trade at 1. In the first trade our stop loss was 15 pips. If we had made the first trade with just 0. We made pips. Since we had traded with 0. In the second trade our stop loss was 20 pips. Our risk would have been again 4. This gives us a return of Now it all depends on you how much risk you want to take. Since I have been trading with my system for a long time, I have much more confidence in it plus I know how it works. I would have taken the first aggressive approach. However, you need to be conservative in the beginning. You could have used 0. It would have meant a risk of just 1. This translates into making a gain of When price makes a new move, it will try to make a retracement and come within pips of the top or the bottom. On the 15 minute chart, this is the time to make the entry. This retracement always takes place. I will need to use the Elliott Wave Analysis to explain that we will enter system wave 2. Wave 1 is the opening impulse wave which shows that a new trend is in place. Wave 2 is a corrective wave or what we call the retracement. Wave 3 is the longest impulse wave. Wave 4 is another corrective wave or is a retracement while wave 5 is the last impulse wave before the new trend sets in in the opposite direction. At the end of wave 5, you will spot the divergence pattern appearing on the chart. More on that in a future post. I always enter when the trendline gets broken in the direction of the planned trade plus when the Stochastic is in the overbought condition on M15 incase of a short trade and it is oversold on M15 in case of a long trade. Most of the time I am able to enter with a stop loss which is below 20 pips. Sometimes I miss it. Everyday market moves up and down. Everyday will bring a new opportunity to make pips. You should always keep the risk as much low as possible. So basically we enter on one divergence signal and exit on the next divergence signal. The crux of this system lies in finding a very low risk entry for your trade. You can also read my post on how to use this same Forex Divergence System for trading on H4 timeframe. Now it is a good idea to trade alongside professional traders. Their professional daily and weekly market commentary can help you a lot in trading important areas of support and resistance where trading currency pair will rebound. Forex Mentor PRO is a good service that is run by two professional forex traders. However, they use a different system. They try to trade on the pullbacks when the trend is established. The quality of the market commentary is good and you can try them RISK FREE for 7 days to see if it works for you or not. There are many educational videos that you can watch during this 7 day trial period. There is no download. This is the first post in a series of posts that explains my swing trading system in detail. In this post, I explain how to use my swing trading system on H1 timeframe. In next posts, I will explain how I use this same swing trading system on H4 and D1 timeframes. I also use the same system for scalping. In another post, I will explain in great detail how I use the same system for scalping. Read this post a number of times as I have written it in great system. If you are new to the concept of divergences, you should click on the link that I have provided in the beginning of this post and download the PDF that explains divergence in great detail. After that you should read this post again. I hope this helps. The most important thing is the skill. Trading is not important. I have explained my system in detail above. I have also included 2 PDFs that explain in detail candlesticks, moving averages and divergences. Read this post fully. I have explained everything in detail. People email me about the MACD indicator that I use. It is a standard MCAD indicator. The only difference is that it changes color when the price momentum increases or decreases. Price momentum is measured by the difference system the 2 EMAs. There are many indicators listed on this page. You will find it 13 positions above the last indicator listed on this page. Now this is a MQL4 file. If your MT4 platform has automatically upgraded to Buildyou will need an ex4 file in addition to the mq4 file in order for this indicator to work. Use the MQL4 to EX4 compiler below:. All the instructions on how to use this MQL4 to EX4 compiler are explained in a very easy manner on this page. Please feel free to leave your questions on this page about my Swing Trading System. I would love to answer your questions. I have described the Forex Binary Options Post in a different post in great post. Enter your name and email address below to get Instant Access to our Free Resources. Your Privacy is protected. Home About Me Privacy Policy FTC Disclosure Courses R For Traders Machine Learning Using R For Traders Algorithmic Trading With R. A Forex Divergence Trading System For H1 Timeframe! How To Double The Account Every Month With This Trading System? Important Tips When price makes a new move, it will try to make a retracement and come within pips of the top or the bottom. YOUSEF January 19, Bruce January 29, Rick Schwagel June 1, Inspiring system, clear presentation. Use the MQL4 to EX4 compiler below: Roby August 17, Get My Forex Systems FREE! A Forex Scalping System That Makes Pips Anytime With A Small Stop Loss Of 10 Pips! Download My 3 Powerful Day Trading Indicators FREE Join Our Million Dollar Trading Challenge. Get Our Swing Trading System FREE! YES, I WANT TO JOIN. Subscribe Me To The Newsletter!
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