All traders search for the hidden
All traders search for the hidden chart pattern or new oscillator that will revolutionize their trading and put stacks of money in their pocket. Of course, we know that there is no undiscovered trading system out there that assures a day trader 100% accuracy. Yet many traders search for the Holy Grail of day trading that will ease the burden of making decisions as to which trade is appropriate and which trade is the loser or winner. There are, however, many tools that traders fail to implement into their trading methodology.
One of the simplest methodologies, especially when verifying potential trade opportunities from a single source, is to compare the readings on a given oscillator to the readings on a board or as corollary oscillator and/or moving average. When dealing with non-paired investment products, it is important to understand and recognize that your backup oscillator, or filtering device, is in complete agreement with your primary trade indicator. Any deviation between the two oscillators or moving averages would indicate some ambiguity in a potential trade. For me, when to trading oscillators are in disagreement I find myself in a position to pass on the trade. They are, quite simply, a red flag of danger when considering the trade. I would also point out that despite nonconvergent, or divergent indicators can still results in a very profitable trade. However, experience has taught me that divergent indication on a given trade is a bright red warning signal. In the process of risk assessment for a given trade, this convergence and divergence should be of paramount importance; it is, however, a green light to trade when convergent buying/selling signals are observed. All trades must be considered in relation to what is happening in the overall market. Quite simply, like all things trading, it's important to understand where you are on a given chart and not try to buck the trend the market is in the process of developing.
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