Types Of Divergence Trading.

As we know that there are two types of divergence in currency trading-regular and hidden divergence:

Regular Divergence happens in two trends. One is when the price creates higher highs when the oscillator says otherwise and the other is when the live quote creates lower lows when the oscillator is not. A regular divergence is generally used as a possible sign that a trend reversal could happen.Regular divergences can help a Forex trader make a large profit because they can step into the trade right when a trend changes.

Hidden Divergence occur when the oscillator makes higher highs while the price is not and when the oscillator makes lower lows while the live quote is not as well. In a way, regular divergence is the result of changes in the price trend that might happen in the near future while hidden divergence confirms past live quote trends.A hidden divergence is a possible sign for a trend continuation.Hidden divergences can help a Forex trader make more profit by staying in the trade longer and being on the right side of the trend.

It is very important to learn how to spot the divergences when they occur, and learn to figure out how to read the direction the trend will go. Divergence trading on the Forex market can greatly maximize the profits and return on investment while minimizing the risks of a loss on the market.