• A successful divergence trader doesn’t just spot RSI hooks—they operate a layered workflow with confirmation, filters, and strict risk rules.
• The biggest edge comes from filtering out false signals using ADX, swing structure, and higher-timeframe alignment, not from finding more divergences.
• A repeatable daily workflow (pre-market scan → confirmation stack → journaled execution) is what separates profitable divergence traders from beginners.
• Risk management—ATR-based sizing, the 1% rule, and scaling at structure—matters more than the divergence pattern itself.

Table of Contents

• What a Divergence Trader Actually Does
• The Four Types of Divergence Every Trader Must Know
• Best Indicators for Spotting Divergence
• The Divergence Trader’s Confirmation Stack
• Filters That Eliminate False Divergence Signals
• A Step-by-Step Divergence Trading Workflow
• Risk Management Rules for Divergence Traders
• Common Mistakes That Sink New Divergence Traders
• How to Build Your Edge as a Divergence Trader
• FAQs

What a Divergence Trader Actually Does

A divergence trader is a technical specialist who builds trades around one core idea: when price and momentum disagree, the existing trend is losing fuel. But the day-to-day reality is far less glamorous than textbook diagrams suggest. Real divergence traders spend most of their screen time rejecting setups, not entering them.

Divergence trader vs. generic technical trader

A generic technical trader scans for any clean pattern—breakouts, flags, support bounces. A divergence trader narrows the universe. They wait for momentum exhaustion to align with structure, then deploy capital only when several layers of evidence agree. Specialization means fewer trades, deeper context, and a much higher signal-to-noise ratio.

Why traders specialize in divergence

Specialization compounds. After 500 divergence trades, you start seeing nuances no checklist captures: the way RSI curls before a real reversal, the volume signature that precedes a failed signal, the candle shapes that mark genuine exhaustion. That pattern recognition is your edge—and it only develops if you commit to one playbook.

Markets and timeframes where divergence works best

Divergence works best in liquid, mean-reverting environments: major FX pairs, large-cap equities, index futures, and high-cap crypto. On timeframes, the 1-hour and 4-hour charts offer the cleanest balance of signal quality and trade frequency. Sub-15-minute charts produce too much noise; daily charts produce too few setups for skill-building.

The Four Types of Divergence Every Trader Must Know

Before any workflow makes sense, the categories have to be automatic.

Regular (classic) divergence

Regular divergence signals potential reversal. Bullish regular divergence: price prints a lower low, the oscillator prints a higher low. Bearish regular divergence: price prints a higher high, the oscillator prints a lower high. This is the trend-exhaustion signal most beginners chase.

Hidden divergence

Hidden divergence signals trend continuation—and it’s where experienced traders quietly make a lot of their money. Bullish hidden divergence: price prints a higher low, the oscillator prints a lower low (in an uptrend pullback). Bearish hidden divergence: price prints a lower high, the oscillator prints a higher high (in a downtrend rally). Hidden divergence keeps you trading with trend, which dramatically improves win rate.

Quick-reference table

Best Indicators for Spotting Divergence

Tools matter less than how you use them, but each oscillator has personality.

RSI divergence

RSI (14) is the workhorse for most divergence traders. For a full breakdown of how it is calculated, see Investopedia on RSI. It’s responsive, well-calibrated, and produces clean swing peaks. The trick: only trust RSI divergence when the prior swing pushed into overbought (>70) or oversold (<30). Mid-range divergences are noisy.

MACD divergence

MACD captures slower momentum shifts and works better on higher timeframes. The histogram is more useful than the signal-line crossover—watch for shrinking histogram peaks while price extends. MACD divergence on the 4H or daily often precedes multi-day reversals.

Volume-based divergence (OBV, A/D)

On-Balance Volume (OBV) and Accumulation/Distribution add the most underrated layer: participation. If price makes a new high but OBV doesn’t, large players aren’t buying the move. Volume divergence is especially powerful for stocks and crypto, where flow data is meaningful.

The Divergence Trader’s Confirmation Stack

This is what separates pros from people who just draw lines on RSI. A divergence trader never enters on a single signal—they require a stack of evidence.

Layer 1: Valid swing highs/lows

The swing points must be obvious. If you have to squint, it’s not a swing. Use a minimum bar separation (e.g., 5 bars between pivots) and require visible structure. Tiny ripples don’t count.

Layer 2: Indicator confirmation

The oscillator must clearly disagree with price. The peaks/troughs should be unambiguously higher or lower—not “kind of equal.” Ambiguous indicator readings produce ambiguous trades.

Layer 3: Price action trigger

Divergence alone is not an entry. You need a trigger: a break of a minor trendline, an engulfing candle at the divergence low, a failed retest of the swing high. The trigger is what tells the market it’s time. Without it, you’re early—and early is usually wrong.

Layer 4: Higher-timeframe alignment

The setup on your trading timeframe should not contradict the higher timeframe. If you’re taking a bearish divergence on the 1H but the 4H is in a strong uptrend with no exhaustion, you’re fighting a current. Pros either skip these or take half-size.

Filters That Eliminate False Divergence Signals

Why does divergence fail so often? Because most traders take every divergence. Filters are how you cut the bottom 60% of setups.

The ADX filter

ADX measures trend strength. When ADX is above 30, regular (reversal) divergences fail constantly—strong trends grind through them. Rule of thumb: take regular divergence only when ADX is below 25, and take hidden divergence only when ADX is above 20.

Swing distance and structure rules

The two swing points forming the divergence shouldn’t be too close (noise) or too far apart (stale signal). A practical window is 10–50 bars. Also: the second swing must occur at meaningful structure—a prior support/resistance, a key Fibonacci level, or a session high/low. Divergence in no-man’s-land is unreliable.

Why triple divergence beats single divergence

A single divergence catches early; a triple divergence catches exhaustion. When you see three consecutive lower highs in price paired with three consecutive higher highs in RSI, the move is genuinely out of buyers. Win rates on triple divergences are dramatically higher, even if the setups are rarer.

A Step-by-Step Divergence Trading Workflow

Process beats prediction. Here’s the daily loop a working divergence trader runs.

Pre-market scan

1. Review higher-timeframe bias on your watchlist (10–20 instruments max).
2. Mark key support, resistance, and prior session extremes.
3. Flag any instruments showing developing divergence on the 4H or 1H.
4. Set alerts at the trigger price—don’t sit on the chart waiting.

Entry, stop, and target rules

• Entry: On confirmation candle close after the price-action trigger.
• Stop: Beyond the swing extreme that formed the divergence, plus a small buffer (often 0.5× ATR).
• Target 1: First major structure level (typically 1R–1.5R).
• Target 2: Measured move or opposing structure (often 2.5R–3R).

Post-trade journaling

Every trade gets logged: screenshots before and after, the divergence type, ADX reading, confirmation layers present, emotional state, and outcome. The journal is your real curriculum—it teaches you which conditions actually pay you.

Risk Management Rules for Divergence Traders

The pattern doesn’t make you money. Risk management does.

Position sizing with ATR

Set stop distance based on volatility, not a fixed pip count. A common approach: stop = 1.5× ATR(14) beyond the swing. Then size the position so that stop distance equals exactly your max risk in dollars.

The 1% risk rule

Never risk more than 1% of account equity on a single divergence trade. For a broader framework on protecting your capital, see 8 Forex Risk Management Rules That Matter. Divergence has good R:R but mediocre raw win rate (often 45–55%). At 1% risk, a normal losing streak is annoying. At 3% risk, the same streak is account-threatening.

Scaling out at structure

Take 50% off at the first target to lock in a winning trade. Move stop to breakeven. Let the remaining 50% run toward the second target. This converts mediocre R:R into consistently profitable expectancy.

Common Mistakes That Sink New Divergence Traders

• Entering on the divergence itself, not on a confirmed price-action trigger.
• Fighting strong trends with regular divergence (ADX above 30).
• Ignoring higher timeframes and getting steamrolled by larger flows.
• Moving stops to “give the trade room” once it goes against them.
• Cherry-picking divergences after the fact, then assuming the win rate is real.
• Trading every oscillator wiggle instead of waiting for clean, well-separated swings.
• No journal, so the same mistakes repeat for years. Trading discipline is harder than chart reading — the hardest part of trading is often doing absolutely nothing.

How to Build Your Edge as a Divergence Trader

Edge is not a setup. Edge is a process repeated until it’s measurable.

Backtesting your divergence rules

Before risking real money, manually backtest 100+ historical divergences on your chosen instrument and timeframe. BabyPips has a solid guide to backtesting forex strategies if you need a starting framework. Record win rate, average R, and which filters mattered. You’ll discover that maybe only 30% of “valid” divergences—the

Final Note & Indemnity Clause
The content on this page is provided for educational and informational purposes only and does not constitute financial or investment advice. Forex and CFD trading involves significant risk of loss and is not appropriate for all investors. Past performance is not indicative of future results. ForexMentorPro.com and its contributors accept no liability for any trading losses arising from the use of this material. Always seek independent advice from a regulated financial adviser before making any trading or investment decisions.

The post Divergence Trader: How to Spot, Confirm, and Profit from Divergence Setups appeared first on Forex Mentor Pro.

The major changes to the internet that the metaverse will bring. Whilst at the same time a 2 year global pandemic, followed by a war in Europe and the knock on effects that is going to have on fuel commodities & worldwide food inflation.

Hopefully, nothing else comes along at the moment.

In today’s video I explain my take on the current situation.

In the first segment, I look at perspective. We often hear the story of “if you had only invested $1000 in Amazon at its IPO in 1997 and held them (that’s the crucial part of the sentence) you would now be a multi-millionaire.”

The statement is correct. However, unlike the arrow in the diagram below, the price did NOT go up in a straight line. In fact, it was a VERY bumpy ride.

In the early years price dropped from an initial high of around $110 per share, right back down to just over $5.

So a 95% drop a few years after its launch. How many investors would have been willing to stomach that kind of drop?

There were then numerous +50% drops in the following 20 years.

The most recent drop of -45% of one of the most successful companies on the planet (which may have further to fall) is further testimony to the fact that crypto is not alone.

Gold: I experienced a similar journey with gold.

I invested $10,000 in 2001 when it was at $380.

I then watched it drop 15% and take over a year to get back to my initial buying price.

After the 2008/2009 crash, it peaked at a $1000.

Had I stayed in all the way? No. There were many pullbacks along the way- see the video.

Bitcoin is following a similar pattern- watch the video to see how close it is following Amazon’s trajectory in the early years!

Similarly, successful investors, especially those who put money into a revolutionary technology need strong stomachs. This is why since the beginning of this crypto journey I have stressed the importance of only risking money you can afford to lose & take profits periodically.

In times of crisis, gold has always been the ultimate safe haven. At the moment that does not appear to be the case, but if things get worse economically I feel it’s a good place to have some cash allocated.

This year I have also been converting €uros & Gbp into $USD as a hedge.

I have been longing the $ via forex trades.

This is the first part of a video update that I posted for members of my crypto website.

The rest of the content is only for them. It would not be fair to share it here, but I went on to discuss how I was investing in gold and other metals (mainly via mining stocks). Which conventional stocks I have taken small positions in, like Amazon I bought a few late last week (at a price I pointed out at FMP in a live session 6 months ago).

DO I think stocks have hit a bottom yet? Probably not! But by taking small bites at each drop I hope to cost average in. Stocks are not a big part of my portfolio and the ones I do buy are generally with a multi year timeframe in mind.

As I show in video and the notes above, its imperative to only risk money you can afford to lose and have a strong stomach and be able to not stress in the down periods.

Finally to reinforce my stance. I NEVER use leverage on anything apart from forex.

Best wishes

Marc

The post Some Perspective & Crypto, Stocks & Metals appeared first on Forex Mentor Pro.

I’m home, so the sound should be a lot better 🙂

There was big news all around last week and the world seems to be in a bit of a mess with interest rates and inflation figures seemingly being manipulated and ‘strategically’ adjusted. We will have a more in depth discussion about this in the live session on Tuesday -link below.

We also had a big unexpected event with Evergrande, one of China’s top property developers, potentially collapsing under a mountain of debt. Evergrande makes up about 2% of China’s GDP, so you can imagine the shockwaves this has (and there’s probably still more to come) sent around the world.

When these types of events happen they send uncertainty into the financial markets and money tends to flow into ‘safe haven’ currencies such as the US dollar and Swiss Franc. This is typically known as a risk off environment as everyone is more cautious then usual. I also show you a potentially useful tool for your fundamental analysis tool box. The ‘VIX’ index acts as a fear indicator and can give you potential clues as to how risky the assets are that investors are willing to invest in. There is money to in these markets, but you need to know what you are doing!

For the week ahead there isn’t that much red flag news, but quite a few ‘tricky’ speeches to make a note of.

Let’s have a look at some potential levels;

As always, remember correlation!

The post Weekly Analysis: Half a months profit…1 pre-planned trade. appeared first on Forex Mentor Pro.

(apologies about the indifferent sound quality, I’m still in Portugal at the moment).

We finally had one of our previous trades fired and managed to get 180 pips! We keep reiterating this, but you do not need to ‘hit’ many trades in order to make your monthly target. Remember, we are trying to make money, not trade for trading’s sake.

Hopefully I also kept you out of a losing trade last week. I mentioned in last week’s video that the Aussie dollar strengthening against, especially, the US dollar, just didn’t make sense. This week we saw the fundamentals catch up and the AUD drop against the dollar. I also hope you managed to tip-toe around some of last week’s rate statements.

There is quite a bit of red flag news again this week with the US retail sales, the big one on Thursday -if retail sales are up it presumably means the economy is growing …and the US is still the biggest economy in the world. You do the math on how that could affect the USD.

Remember that if you trade the daily and especially the weekly charts that you need to have the discipline to wait for price to come to you – set the trap!  Chasing the price will always get you into trouble. Have your risk management in place and give yourself the best chance to catch the highest probability trade setups.

As always, remember correlation!

The post Weekly analysis: 1 Trade -180 pips + avoiding losses. appeared first on Forex Mentor Pro.

I’ve created a short video to not only give you guys an update on this weeks happenings in the world of forex, but also to give everyone an update on the incredible growth of our crypto portfolio. A growth achieved by applying the methods we teach right here on FMP!

Forex

We saw the NZD (New Zealand dollar) rocked by a tweet that basically stated the delay in a rates hike was due to a problem with communication….the irony does not escape me. Remember that a rates hike i.e. an interest rate hike is generally good for a currency. Now you can imagine what happens (and probably saw this week) what happens when a rates hike is promised, but does not realise…not good! Don’t feel to be bad though, these are things that are out of our control and does sometimes happen with trading. The key is to control your risk at all times.

It’s Jackson Hole this week and you need to be really careful trading around this event, now and in the future. Essentially a bunch of central bankers from around the world get together and talk shop. As you can imagine, however, this can effect any and all currencies -think of it as all in red flag news.

I have also given an update on various currency charts. There are very good examples of ‘strategically splitting an entry’, ‘when not to trade’, ‘correlation’ ‘multiple reasons for the stop’, ‘positional trades’, ‘managing risk’ and ‘good risk vs reward’. Definitely something to learn from no matter what you might be battling with.

See the video below for the details.

Crypto

Remember, we look at the fundamentals first when it comes to crypto trading and specifically their real world use -how could they potentially make your and my life easier? Bitcoin briefly passed $50,000 this week as there were further signs of  real world integration, as one of Americas biggest mortgage lenders revealed plans to start accepting bitcoin as payment. (As predicted though, BTC bounced of off this level -M2 anybody? 🙂

One of our coins (Cardano) is now up an incredible 6000% since we first launched our crypto site. This means that if you had started with us when we launched our crypto portfolio and had invested $1000 into Cardano, it would now be worth $61,000 …I’ll just let that sink in. I still believe in crypto fundamentally and it’s definitely not to late to get involved. Remember, the methods we teach you at FMP can be used for Forex, Crypto & Stocks.

Link to our new crypto mini course

Cheers!

The post How we turned $1,000 -$61,000…in 15 months appeared first on Forex Mentor Pro.

How are you doing?

All good this side of the world and we are working like wild men on the farm at the moment.

Looking at my charts then I have 8 pairs that meet the requirements for an Earth and Sky trading zone this week.

Remember in a………………. 

In a Short zone the 4 hour and daily must show all red lights on the direction indicator and we must have a close more than – 50 pips.

and in a Long zone the 4 hour and daily direction indicator must have all green lights and we must have a close more than + 50 pips.

Let’s have a look at some zones…………………..

………………………………………………………………………

Let’s have a look at some Earth and Sky set ups to keep an eye on….

……………………………………………………………………

 1) Euro/Aussie on the 4 hour chart:

The direction indicator is short on the 4 hour AND THE daily chart and we closed min 215 pips lower than last week`s opening so we did meet ALL of the requirements to fib the 4 hour chart for this week’s Earth and Sky trading zone.   

Currently I have a short zone between 1.5776 and 1.5855 with areas to keep an eye on at 1.5772 and 1.581 and 1.5853 areas again for possible shorts.

Counter longs from the WS1 pivot at 1.5609 and the WS2 pivot at 1.5528 areas.

Notes:

If we make new lower lows follow price with your fib to get the adjusted short zone for the week

……………………………………………………………………

2) Euro/NZD on the 4 hour chart:

The direction indicator is short on the 4 hour AND THE daily chart and we closed min 204 pips lower than last week`s opening so we did meet ALL of the requirements to fib the 4 hour chart for this week’s Earth and Sky trading zone.   

Currently I have a short zone between 1.6793 and 1.6871 with areas to keep an eye on at 1.6793 and 1.6830 and 1.6871 areas again for possible shorts.

Counter longs from the WS1 pivot at 1.6593 and WS2 pivot at 1.6458 areas.

Notes:

If we make new lower lows follow price with your fib to get the adjusted short zone for the week

……………………………………………………………………

3) Euro/GBP on the 4 hour chart:

The direction indicator is short on the 4 hour AND THE daily chart and we closed min 71 pips lower than last week`s opening so we did meet ALL of the requirements to fib the 4 hour chart for this week’s Earth and Sky trading zone.   

Currently I have a short zone between 0.8795 and 0.8824 with areas to keep an eye on at 0.8795 and 0.8811 and 0.8824 areas again for possible shorts.

Counter longs from the WS1 pivot at 0.8721 and WS2 pivot at 0.8672 areas.

Notes:

If we make new lower lows follow price with your fib to get the adjusted short zone for the week

……………………………………………………………………

 4) GBP/JPY on the 4 hour chart:

The direction indicator is long the 4 hour AND THE daily chart and we closed plus 120 pips higher than last week`s opening so we did meet ALL of the requirements to fib the 4 hour chart for this week’s Earth and Sky trading zone.   

Currently I have a long zone between 143.87 and 143.35 with areas to keep an eye on at 143.87 and 143.35 areas again for possible longs.

Counter shorts from the WR1 pivot at 145.49 and WR2 pivot at 146.22 areas.

Notes:

If we make new higher highs without the correction follow price with your fib to get the adjusted long zone for the week.

……………………………………………………………………

 5) Aussie/JPY on the 4 hour chart:

The direction indicator is long the 4 hour AND THE daily chart and we closed plus 109 pips higher than last week`s opening so we did meet ALL of the requirements to fib the 4 hour chart for this week’s Earth and Sky trading zone.   

Currently I have a long zone between 80.36 and 79.94 with areas to keep an eye on at 80.36 and 80.16 and 79.94 areas again for possible longs.

Counter shorts from the WR1 pivot at 81.37 and WR2 pivot at 81.83 areas.

Notes:

If we make new higher highs without the correction follow price with your fib to get the adjusted long zone for the week.

……………………………………………………………………

 6) NZD/JPY on the 4 hour chart:

The direction indicator is long the 4 hour AND THE daily chart and we closed plus 93 pips higher than last week`s opening so we did meet ALL of the requirements to fib the 4 hour chart for this week’s Earth and Sky trading zone.   

Currently I have a long zone between 75.49 and 75.17 with areas to keep an eye on at 75.49 and 75.34 and 75.17 areas again for possible longs.

Counter shorts from the WR1 pivot at 76.26 and WR2 at 76.65 areas.

Notes:

If we make new higher highs without the correction follow price with your fib to get the adjusted long zone for the week.

……………………………………………………………………

 7) NZD/SGD on the 4 hour chart:

The direction indicator is long the 4 hour AND THE daily chart and we closed plus 97 pips higher than last week`s opening so we did meet ALL of the requirements to fib the 4 hour chart for this week’s Earth and Sky trading zone.   

Currently I have a long zone between 0.952 and 0.9540 with areas to keep an eye on at 0.9572 and 0.9557 and 0.9540 areas again for possible longs.

Counter shorts from the WR1 pivot at 0.9650 and WR2 at 0.9696 areas.

Notes:

If we make new higher highs without the correction follow price with your fib to get the adjusted long zone for the week.

……………………………………………………………………

8) CAD/JPY on the 4 hour chart:

The direction indicator is long the 4 hour AND THE daily chart and we closed plus 66 pips higher than last week`s opening so we did meet ALL of the requirements to fib the 4 hour chart for this week’s Earth and Sky trading zone.   

Currently I have a long zone between 82.14 and 81.85 with areas to keep an eye on at 82.14 and 82.00 and 81.85 areas again for possible longs.

Counter shorts from the WR1 pivot at 82.92 and WR2 at 83.31 areas.

Notes:

If we make new higher highs without the correction follow price with your fib to get the adjusted long zone for the week.

……………………………………………………………………..

Happy trading….

Look out for some catch up post this week in the forum.

Pierre

The post Top 8 Pairs With Zones For Me… appeared first on Forex Mentor Pro.

Hi guys, I explained during the week why you need to be careful about not getting sucked into “pumps & dumps.”

There is a lot of craziness going on in the financial world right now where the little guy is trying to fight back against the status quo. Then there are “big guys” like Elon Musk who only needs to Tweet a single world for a stock, or crypto to surge (then drop just as quickly).

I explained this in Tuesdays live training session and showed how this is happening across stocks & crypto and possibly other markets in the near future:

https://www.forexmentorpro.com/blog/live-forex-crypto-silver-pump-dumps-beware/

You can find all my previous posts in my blog history: Marcs Blog

I also caution every week about not trading around news. If you ever needed to know why here is the Gbp/$ from last Thursday. I said last Sunday “Do not trade any Gbp pair on Thursday morning.” and I still get questions from newbies “why”? Traders were obviously calculating/guessing/gambling that the news was going to be bad. It came out as expected BUT comments from the Governor of the Bank of England saw it rebound quickly.

Lots of Potential Trades

Trade for clients & receive a substantial profit share

If you want to receive a substantial profit share you only need to make 3 to 5% per month. You can find a copy of the brochure here: Trade for Clients

It’s a very light scheduled week for news.

Many of the trades are the same as last week, some with minor adjustments.

Lots of Potential Trades

€uro/$: didn’t work last week, but technically it was a very good setup that I would not hesitate to take again. Now it’s a little bit tricky but I show in the video how there is a daily head & shoulders pattern that suggests this could be a 400 pip drop! I will watch at the open to short from its current position. If it breaks back higher I will wait until Tuesday before getting involved.

There is also an inverse one on the Chf which adds to the theory. The only issue is that the Chf looked to have broken higher last week, then dropped .

Chf: I prefer the Euro so only watching this for correlation. If it moves higher  T I will be looking for a short. The better area is all the way back up at 0.9590- it seems unlikely now, but you never know with forex.

Euro/Gbp: Perfect M2 break of a trendline a couple of weeks ago and hit my 170 pip target BUT I missed the entry 🙁 looking to short again on a pull-back to 0.8900

Gbp/$: 1.3370 looks good for a possible long.  Intraday 1.3500 for possible bounce too.

$/Yen: 104.00 possible long.

Cad: I suspect this may go on a run down over the coming months but for that, I need to either catch it higher up or wait for price to break 1.2600 on a weekly . Explained in the video.

I will short half at 1.2940 and the other half at 1.2990. Also, Possible swing trade around 1.2600 with monthly 200ema to tuck the stop behind.  See the video.

Nzd: Possible longs at 0.7075. If that fails I would long again if it drops to 0.7000. New Zealand has virtually eradicated COVID. Fundamentally I am much more biased to the upside and possible much higher.

Aud: worked last week but Murphy’s law on Friday 🙁  0.7350 long is the most conservative/strongest, but it may not get there. Another possibility is a long at 0.7600- see the video.

Euro/Yen 125.00 is a long for me. Intraday watch 126.00 Possible swing trade 127.70 see the video.

Cad/Yen 80.50 long. Possible swing trade 82.50 watch at the open

Aud/Yen: Looking to long at 79.00 Possible swing trade 83.30 (intraday watch 80.00 as its a big area.

Euro/Aud: We have had a good run on this pair in recent weeks. (swing trade at 1.5600) near the bottom. That is an option once more or a short at 1.5900. Intraday possible short at 1.5830- see the video

Euro/Nzd: 3 levels this week. Intraday watch 1.6860. 1.6990 & 0.7030 (I split the order in two last week) see last Fridays video)

Aud/Nzd: not my favourite pair but good call by one of my private students who shorted at 1.0650 last week. There again now.

Nzd/Cad: Not one of my usual pairs but 0.9050 is an M2 long.

Gbp/Nzd: Another one of my private students pointed out that 1.9400 is “the sweet spot” to short, good call 🙂

M3 Shorter timeframes

See the new course & recent blog posts as to how I do this: I do my analysis on daily and weekly charts first and make a note of the MAJOR areas of support and resistance. Then copy them on to Pierre’s Earth and sky template. Then I make a note of the weekly & monthly pivots points and add them to the charts. You will see lots of opportunities line up during the week. The important thing then is to select a bias for the next few days and do NOT take trades if the price is too near a trend line or pivot. Ideally, you want to buy when the price is near a major support and or pivot point line and has the potential to make at least 40 pips. Vice versa for a short.

New members, please note: If I am looking to take a trade long, for example, 1.5000, I place my order 10 pips above & 10 pips below for a short. This is because price often does not quite reach a major line and you need to allow for spreads.

We are NOT a “tipping service” our aim is to teach you how to trade for yourself.

For more up to the minute, updates do not forget to drop by the forum.

Watch the video for more detailed explanations of this week’s analysis and trade plan.

Lots of Potential Trades

The post Lots of Potential Trades: Weekly Analysis appeared first on Forex Mentor Pro.

Hi everyone…

How was your week?

It was not the easiest trading form longer timeframes.

Our brand new M3 day trading system is working brilliantly and it is based on my Earth & Sky forex system. So how did we do this week?

Let’s have a quick look at a few of the pairs we trade each week here at Forexmentorpro…….

………………………………………………………………………….

1) USD/CHF: Going nowhere this week…….stuck at the 55 EMA and weekly main pivot at 0.9507 area…..plus we in a triangle on the 4 hour chart…..I have a feeling we going to pop to the upside….if that is the case then I will re look to short from the 200 EMA at 0.9600 area.

………………………………………………………………………….

2) USD/CAD: went nowhere this week……stuck at the MS1 pivot and some EMA`S at the 38.2 fib at 1.3640 area…….have a feeling we can pop to the upside…..so will be keeping an eye on the 55 and 200 EMA at 1.3768 area to short from again.

………………………………………………………………………….

3) Dollar/JPY: Found nice resistance early at the week at the 200 and 55 EMA`S at 107.77 area and dropped …..currently very close to main profit take area at last weeks low at 106.57 area.

………………………………………………………………………….

6) GBP/JPY: Got very close to the 200 EMA at 136.62 where I said to re look for shorts from….it dropped like a stone and took the 200 EMA and 55 EMA support out at 134.39 and went all the way to the WS1 pivot at 132.43 area. …..possible support here…

………………………………………………………………………….

9) Euro/JPY: Dropped back and currently sitting on the 50% fib at 119.73 area where we have loads of EMA`s to give support….possible longs can set up from here…

So in my book……the best setups where the….

* Euro/GBP
* GBP/JPY
* USD/JPY

AND THAT IS THAT LADIES AND GENTS…

Have a super weekend.

Regards

Pierre

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Judith’s Article

Is somebody able win the lottery? Can someone be the recipient of an unknown benefactor’s inheritance?

The answer to both of these questions are of course “yes”. However, I wouldn’t go making drastic life decisions just yet. Plunking down your life savings in lottery tickets. Quitting your job. Waiting for the phone call to inform you of your huge inheritance. These aren’t the way to go.

Boom to Bust

Can an Amateur Trader Make Big Profits? is a question on many newbie traders’ minds. In fact, I myself tripled my very first Forex account in only a matter of 3 weeks and made large Forex trading profits! With ZERO knowledge about how to trade! It’s what happened next that is more important though. This illustrates that as important as this question might be, it is what is behind the question that really needs answering.

That fabled first account. I knew nothing of trading, and took positions based on “feel”. I had very little idea about what size lots I was trading, or how currency pairs moved. But somehow, I managed to catch a streak of winning trades my first few weeks in the business. Now I know, that was based on sheer luck and I just happened to catch a period in the pairs. I was trading where they were essentially moving in the same direction during that month, or “trending” for that time period. I had taken a crack at the market. And then, that fateful evening came, and I took a stab at a few more trades. They started to go against me.  Because I didn’t use a stop, I just let them go against me.

In fact, I “doubled down” and took more orders. I figured things would turn around and I would be in an even better position from a cost-averaging point of view when they did. I kept adding more orders as the market went against me, and the market kept going against me. Several hours later, my broker closed the positions I had open. I had reached the “margin call” breaking point. Just like that, more than EIGHTY PERCENT of my account was GONE.

I didn’t even know what to think. I simply didn’t know what I was attempting to do.

A Familiar Story in Forex Trading

If you speak to experienced traders, read a lot on the subject, you might find that what I did is somewhat common. When people come to trade Forex with nothing more than a dream, an idea, and a few hundred bucks to fund an account with.

So, the technical answer to Can an Amateur Make Big Forex Profits? could certainly be “yes”. But, I would also add to that, unless that same amateur Forex trader took the time, and did the work to truly LEARN the craft of trading, those gains would not hang around long, and would inevitably end up in someone else’s pocket much like mine did with my first live account.

Can an Amateur Trader Make Big Forex Profits? – It’s all about Risk 

I would encourage new traders rather than to focus on the profits potentially gained by the trading, to start working on how to manage the RISK involved with the LOSING of money first! Have a foundation of excellent risk management and learn how to hold on to your capital. This way, even someone who randomly chooses trades, stands a much better chance trading than someone with the knowledge of how to select entries but has absolutely no idea how to control their risk.

So, instead of wondering how to make big profits being an amateur, I would recommend spending the effort and time learning how not to lose money. Master this, and the big profits will eventually find you in my opinion and experience.

All too Common in the Forex Trading World

Judith’s story is far from unique. In fact, I made exactly the same mistakes early in my trading career. Amateur traders can make big money trading forex, anybody can make big Forex profits, but it’s whether you can make a sustainable career in trading forex that is the key element. I could go to the casino tomorrow and put a money on the roulette table picking black and win big. Does that mean I am a casino expert? Likewise, I could pick a horse at a horse race because I happen to like its name? Does that mean I’m now a horseracing expert?

Clearly the answer to both of those questions is no, it’s luck. And while you can be lucky for some time, ultimately it will run out. Trading is a game of probability, it’s similar to gambling. Only the more knowledge you have and the more time you spend learning you can move the odds in your favour.

Compounding is Key to Success 

So how do amateur traders make big forex profits? A little understood concept is the nature of compounding. Clearly, a large number of new traders expect to start making huge sums of money very quickly, and are often sold the dream of Ferraris and Lamborghinis. There is no such trading black box system that you can buy. The only people making big Forex profits from that kind of approach are the people selling the system.

Compounding on the other hand is where you start with a figure, make small gains each month which then over time turns into a large sum of money. In an example, start with $10,000, make a modest 5% per month and you will have almost $200,000 within 5 years. Compounding is a good way to make big forex profits.

Risk Management in Forex Trading

The other way to make money from trading forex is to manage your risk appropriately. Amateur traders really struggle to understand this. They focus the win ratio believing they need to be right more than they are wrong.

However, if you want to make big profits in forex trading, managing risk is the way to do it along with picking high probability trades. Look at the above chart and you can see that with small risks of 1% of your account, and a proper risk to reward ratio, even with a strike rate as low as 40%, you could still be very profitable.

So, in conclusion, you want to make money from forex trading? Make the effort to learn, manage your risk and compound your account.

If you would like to learn how to trade like a professional AND receive full video training courses plus detailed daily analysis BEFORE the event where we show you what we intend to trade, where & why, then check out our 5* rated forex mentor program, RISK FREE; by clicking on the “Get Started Today” Button below

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1. Trading Emotionally

One of the key reasons why forex traders lose money is because they trade emotionally. Avoiding emotional trading can be the best way to avoid losing money in forex. When we say trading emotionally, we mean things like revenge trading. People revenge trade when they lose money trading forex and then take ill-conceived trades to try recover that money back.

Another form of emotional trading is over-trading. Some forex traders get a buzz from being in a trade. It is this buzz that makes forex traders again take inappropriate trades just for the excitement.

Another example of emotional training would be traders not closing losing trades. They don’t close the losing trade because they feel it is bound to turn around, ultimately these can lead to huge losses.

2. Not Using a Stop Loss

Another reason why many forex traders lose money, and is somewhat linked to the above, is related to stop losses. Stop losses are a protection that traders can set to ensure they control the maximum amount of money they can lose on a single trade.

However, many new traders tend to not trade with stop losses. This is because they are told that trades need to be given ample space to move against them before moving into profit. This couldn’t be further from the truth.

If you take high probability trades you shouldn’t need a big stoploss, and if you do, you have taken the wrong trade. There are countless stories of people blowing up their accounts, sometimes owing more than what they started with, due to price spikes.

Depending on news events and other market reactions, prices can move extremely quickly. If you don’t have a stoploss, you have no protection against these huge swings.

Another mistake that forex traders make is moving their stoploss. This is a sure-fire way to lose money trading forex. When you take a trade, you should calculate your stoploss based on the percentage of the account you are prepared to lose on that single trade. This should be somewhere between 1% or 2%. It needs to be a figure that you are comfortable losing.

What new forex traders can often make the mistake of doing is moving their stoploss to avoid being stopped out, convinced that the trade will go in the right direction imminently. This means they continue to move there stoploss to a point where they actually can’t face losing that much money and therefore it becomes a self-fulfilling prophecy.

As they now cannot face losing that much money, they remove the stoploss altogether under the misapprehension that it has to turn around and bang goes the account. As a new forex trader you should never trade without a stoploss, and never move your stoploss unless you are moving it to lock in forex trading profits.

3. Trading Without a Plan

Yet another reason why forex traders lose money is trading without a plan. A trading plan is a set of rules that you use to determine whether you should enter a trade or not. This could be a simple plan like moving average crosses or a complex plan involving multiple indicators and confluences.

Whatever the plan sticking to it enables the trader to remove the emotions from opening a trade. If it doesn’t meet your plan you simply walk away, no questions asked. Once you have a trading plan you can then begin to modify it and look for patterns between successful and unsuccessful trades, refining your trading plan accordingly.

Not having a trading plan means that you are trading on gut instinct without any real understanding of what you are doing. This is tantamount to gambling, and is one of the biggest mistakes forex traders can make. A successful forex trader needs to be disciplined.

Think of a playbook for an NFL team, or a training regime for a boxer, they are the equivalents of the trading plan. How would an NFL football team do without a playbook? There is a saying, “plan your trade and trade your plan”, and this couldn’t be more true.

4. Over Leveraging

Over-leveraging in forex is another common way where traders lose money. Leverage is somewhat of a double-edged sword. People are attracted to forex trading because they can get leveraged accounts. This means that they have access to capital far in an excess of their actual account value.

That’s why so many traders can start with small account sizes, in some cases as low as $50. With high leverage they are able to access far more capital.

Let’s quickly explain what leverage is in forex trading.

Let’s say you had an account which had leverage of 200:1, and you deposited $1000. This would in effect mean that you had access to 200,000 units of your chosen currency. Clearly it is very easy to see that by having just $1000 and being able to trade with $200,000, a profitable trade can be very profitable. However, leverage also works in the opposite direction in that leverage enlarges your profits and forex losses by the same magnitude.

While the tendency is to use high leverage accounts to maximise your profits on a small account, you are much better using reasonable leverage and aiming for consistency with proper risk management.

5. Oblivious to the News

Finally, another reason that forex traders lose money is being unaware of news releases and economic circumstances. Currency prices are driven by both economic performance for a particular country as well as reaction to things that are happening around the world, such as wars or political instability.

Many forex traders ask the question as to whether technical or fundamental trading is better. The reality is that you need a bit of both to be successful. Technical trading is about finding opportunities on the chart where it is a good place to enter or exit a trade.

However, fundamental data and political news ultimately affects the direction. Let’s say you discover a head and shoulders pattern on a currency pair, and it’s about to break the neckline. That would suggest a good opportunity to enter the trade.

However, a couple of hours after you enter the trade the central bank of the currency you are selling suddenly increases interest rates. That instantly pushes the trade in the opposite direction and you are stopped out.

So while it’s important to use technical analysis to identify the entries and exits, it’s also vital to keep an eye on economic releases and political events to ensure that your technical analysis is in line with what fundamentally is going to happen to that currency. You don’t need an economics degree to understand fundamentals, there are plenty of resources that forex traders can use.

Just a basic understanding of fundamentals can be the difference between being a successful forex trader or unsuccessful forex trader.

I hope this summary of the best ways to avoid losing money trading forex is useful. There are many more pitfalls that you need to avoid as a new forex trader, but these are some of the most common. Keep an eye out for other articles focusing on other topics to help you become a successful forex trader.

If you would like to learn how to trade like a professional AND receive full video training courses plus detailed daily analysis BEFORE the event where we show you what we intend to trade, where & why, then check out our 5* rated forex mentor program, RISK FREE; by clicking on the “Get Started Today” Button below

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