In today forex faq, we have a question from one of our fellow traders in my blog.
Below is the question
I saw a MACD positive divergence on the EURUSD and enter a trade immediately. However I was stopped out when the price continue moving down.
What can I do?
This is a very common problem among new trader and therefore I will like to use this post to share with you my thought on this issue
As a trader, you must know that you cannot trade based on the signal of 1 indicator alone. For me, I will enter a trade whenever there is at least 3 confluence of signals.
My advice to all of you is to use the below 3 signals to confirm an entry
1) Signal from an Indicator
It can be from any indicator of your choice like the MACD, Stochastic or RSI. You just need the indicator to give you a buy or sell signal will do.
2) Price Action
When you get the signal from your indicator, you have to go and take a look at the candlesticks to see if there is any specific price action like the spinning top, railway track or head and should pattern which is a signal of opposing movement.
For example, when you have a SELL signal on your indicator and you see a spinning top, it is a confirmation of a SELL signal. Then you go to the next confirmation below.
3) Existence of Support & Resistance
You have to check if the price has hit a major support and resistance level when the above 2 happens. When there is an existence of a major support and resistance, this will give you additional confirmation to your trade.
If you are a student of my course, you will know that I have another factor known as the pre-trade condition to further increase the winning percentage of my strategy.
In addition, if you can have a false alarm filtering conditions added to your strategy, it will further improve your winning percentage by lowering your losses due to false alarm.
If you are still struggling in your trading, you can take a look at my Forex Course below where I will share with you the exact strategies I am using to trade for myself and user of my trade copier service