Edge Strategy Chapter I
SECTION I THE PRINCIPLES BEHIND THE EDGE
The Edge is not a trending strategy, a breakout strategy or a support and resistance strategy. It is a divergence strategy that uses momentum indicators.
When these two very powerful momentum indicators, the moving average convergence divergence (MACD) and the stochastic oscillator, are diverging
from price they can let us know that the direction of price is about to change.
Recognizing divergence is the most powerful tool to trading success that you can have.
We use two indicators, the MACD and the stochastic, to give us our signal, and the moving average exponential helps keep us in the trade. We also use the RSI that, combined with the signal from the MACD and stochastic, gives us a signal for a very powerful trade.
When we get a signal to enter the market it generally goes in our direction right away, thereby helping to keep our minds calm and clear and ready to take the profit!
Stops are very tight; we do not wait around for our trading capital to evaporate. Because losses are small and two losing trades in a row are uncommon this is an easy strategy to trade psychologically. Some of the most well know strategies have agonizing drawdowns and, as a result, the trader gives up out of frustration and fear.
The Edge is not a trending strategy, a breakout strategy or a support and resistance strategy. It is a divergence strategy that uses momentum indicators.
When these two very powerful momentum indicators, the moving average convergence divergence (MACD) and the stochastic oscillator, are diverging
from price they can let us know that the direction of price is about to change.
Recognizing divergence is the most powerful tool to trading success that you can have.
We use two indicators, the MACD and the stochastic, to give us our signal, and the moving average exponential helps keep us in the trade. We also use the RSI that, combined with the signal from the MACD and stochastic, gives us a signal for a very powerful trade.
When we get a signal to enter the market it generally goes in our direction right away, thereby helping to keep our minds calm and clear and ready to take the profit!
Stops are very tight; we do not wait around for our trading capital to evaporate. Because losses are small and two losing trades in a row are uncommon this is an easy strategy to trade psychologically. Some of the most well know strategies have agonizing drawdowns and, as a result, the trader gives up out of frustration and fear.
Labels: forex strategy
posted by Lilly @ 1:43 PM
