Low Risk Forex trading.

Low risk forex trading strategy-Divergence Trading.

Forex trading involves significant risk of loss.So what about a system with very low risk? Sounds good!

Follow the few easy steps ,before that you need 2 top qualities as a trader


A.Decipline
B. Patience

Ok provided you have those two .lets start

1. Basis
              -Identification of the reversal of a trend.
2.Essentials
              -Trending market-  A clear trend must exist either bullish(up) or bearish (down)
              -Should be able to draw a valid trend line- Line should touch at least three  tops or bottoms.
              -Know your support and resistance levels- R1 and S1( when the price reached R2/3 or S2/3 
                levels its already overbought or oversold)
3.Indicators- Momentum Oscillators- RSI,MACD,Stochastics

4.Time frame - One hour or above.

4.Method- Watch out for Divergence of Price action and Momentum


                          a. Draw a trend line identifying most significant tops or bottoms in the price action and
                              oscillator action.
                          
                          b.Wait for a new top or bottom is formed

                          c.Connect the new swing with the most recent one(ONLY two succesive swings must
                             connect.

                          d.connect the corresponding tops or bottoms in the oscillator- Ideally after the cross.


                          e. Make sure the two points in the price action and oscillators should on line with 
                              each other.( Avoid oversold/overbought conditions)  
                         

                         f. If divergence - make sure this is true or just because of major resistance area-you
                            can spot this by knowing your support and resistance levels /fibonacci /candlestick
                            patterns. 
                            confirmed it by looking at a higher time frame.

                                                If congestion -just wait
                                                If no congestion -look at the trend line ? Break /Reversal
                      

                                          If break same trend will continue
                                          If reversal -it will not.