No Lag Divergence Forex Trading Strategy (2024)

The No Lag Divergence Forex trading strategy is a powerful trading strategy that enables traders to trade divergences in the right bullish/bearish market condition.

Moreover, divergence combinedwith the right mix of technical indicators can build a robust method that works great on any currency pair and timeframe.

Regular divergence are usually employed as a likely sign that trend is halting briefly or making a reversal, but our strategy nicely combines the AIO Divergence indicator alongside other custom indicators to better signal reversals.

The same design of divergence is seen by all traders and they all react approximately in the same way, which makes the strategy very potent.

Chart Setup

MetaTrader4 Indicators: AIO Divergence.ex4(Default Setting), double-cci-woody (Inputs Variable Modified; TrendCCI_Period=80, EntryCCI_Period=36), 60 EMA, forecast-moving-average.ex4(Inputs Variable Modified; MA_Period=21)

Preferred Time Frame(s): 1-Minute, 5-Minute, 15-Minutes, 30-Minutes, 1-Hour, 4-Hours, 1-Day, 1-Week

Recommended Trading Sessions: Any

Currency Pairs: Any pair

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Buy Trade Example

Fig. 1.0

Strategy

Long Entry Rules

Enter a bullish trade if the following indicator or chart pattern gets put on display:

1. If price forms a lower lows as seen between Point C & Point D on the trendline, while the AIO Divergence Metatrader 4 forex indicator forms a higher low between Point A & Point B (refer to Fig. 1.0), a bullish divergence is said to have formed, as such a buy alert is imminent.
2. If the magenta line of the 60 EMA indicator intersects the red line of the forecast-moving-average indicator in a bottom up manner as exemplified on Fig. 1.0, a buy trigger is said to be in place.
3. If the dark gray line and blue histograms of the double-cci-woody indicator hovers above the zero center line as shown on Fig. 1.0, price is said to be pressured to the upside i.e. a trigger to go long on the selected forex pair.

Stop Loss for Buy Entry:Place stop loss below short-term support.

Exit Strategy/Take Profit for Buy Entry

Exit or take profit from all trades if the following rules or conditions takes precedence:

1. If the AIO Divergence indicator forms a bearish divergence, it is signaling a looming price reversal or a brief halt in price movement, therefore an exit or take profit will do.
2. If the magenta line of the 60 EMA indicator and the red forecast-moving-average indicator line intersect during a bullish trend, bulls power is said to be weaning, therefore an exit or take profit will suffice.
3. If the dark gray line of the double-cci-woody indicator dips below the zero center line (see Fig. 1.0), more bulls are said to be exiting their trades, as such it’s time to exit or take profit without delay.

Sell Entry Rules

Go short if the following setups gets displayed successfully on the activity chart:

1. If price forms a higher high as seen between Point C & Point D, while the AIO Divergence custom indicator forms a lower high between Point A & Point B, a bearish divergence is said to have formed, and as such, a sell alert is in the cards.
2. If the magenta line of the 60 EMA indicator crosses the red line of the forecast-moving-average indicator in a top downward manner as illustrated on Fig. 1.1, a sell trigger is said to be in place.
3. If the dark gray line and red histograms of the double-cci-woody indicator break below the zero center line as depicted on Fig. 1.1, price is said to be pushed lower i.e. a trigger to go short on the designated forex pair.

Stop Loss for Sell Entry:Place stop loss above short-term resistance.

Exit Strategy/Take Profit for Sell Entry

Exit or take profit if the following takes center stage:

1. If the AIO Divergence indicator develops a bullish divergence, it is signaling a looming price reversal or a brief halt in price movement, thus an exit or take profit will suffice.
2. If the magenta line of the 60 EMA indicator and the red forecast-moving-average indicator line intersect while a bearish trend is running, bears power is said to be halting, therefore an exit or take profit is recommended.
3. If the dark gray line of the double-cci-woody indicator breaks above the zero center level (check Fig. 1.1), more bears are said to be leaving the market, therefore an exit or take profit is advised.

Sell Trade Example

Fig 1.1

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About The Trading Indicators

The AIO Divergence.ex4is a technical indicator that gauges bullish/bearish price divergence.

The double-cci-woody.ex4custom indicator is an oscillator that deploys two CCIs in defining the direction of trend.

The magenta 60 EMA line is an exponential moving average that has its period set at 60 and reduces the lag by adding more weight to recent price.

The red forecast-moving-average.ex4indicator line is a simple moving average line set at a default period 21.