Trading divergences are probably one of the most underestimated trading methods for the markets. You often see breakout strategies, weighing support and resistance, momentum strategies, etc., but it's not common for traders to talk about divergences. However, there have been many traders who have successfully operated a trading system that focuses on differences. Some even claim to have a 60% to 70% win rate because they master their systems. Well, that's a lot in retail. Imagine you win about 65% of the time and only lose about 35% of the time. That's a 30% difference and over time 30% could mean huge profits.
What is a hidden divergence?
Before we go into the details of a hidden divergence, let's first try to understand what a divergence is.
Divergence in retail is basically a disagreement between price movements and an oscillating indicator. This is done by comparing the swing highs and swing lows on the price chart with the peaks and troughs of the oscillating indicator. Under normal market conditions, the movement of an oscillating indicator's peaks and troughs often mimicked the swing highs and lows on the price chart. However, there are times when the ups and downs move in a different direction while the peaks and troughs of the oscillating display go in a different direction. We call this a divergence.
Hidden divergence is a form of divergence where the swing highs and swing lows on the price chart are still going in their usual direction, while the top and bottom of the oscillating indicator are showing the other.
For example, the price chart could show that the price is reaching a higher low, while the oscillating indicator could be printing a lower low. This would mean the price has gone up, but the oscillating indicator, based on its mathematical calculations, says this low is still relatively cheaper than the previous low. This makes hidden deviations very powerful as a trend continuation strategy.
Trading strategy concept
This strategy is based on the concept of hidden divergences using a custom indicator that conveniently shows divergences, the Wildhog NRP Divergence.
The Wildhog NRP divergence indicator is an oscillating custom indicator that prints deviations both in the oscillating indicator window and on the price chart itself. Arrows are also printed in the direction of trading in the indicator window. Both regular and hidden divergences are printed, with regular divergences being printed as solid lines and hidden divergences as broken lines.
However, we will not take into account all emerging deviations. To further filter our trades, we use the custom indicator Gann HiLo Activator Bars. This indicator shows the short-term trend based on the color of the bars on the price chart. We will only make hidden deviations that match the short-term trend indicated by the Gann HiLo activation bars.
This would mean that the short trend is still going in the same direction and we consider a hidden divergence trade to be a trend continuation trade.
We will leave the trade as soon as an opposite deviation is printed, regardless of whether it is hidden or regular.
Since the display of the Gann HiLo activation bars is printed over the normal candle bars, we will have two templates. One with the candle holders and one with Gann Hilo activator rods.
- Wildhog NRP divergence
- Gann HiLo activator bars
Time frame: 15-minute, 1-hour and 4-hour charts
Currency pair: any
Trading session: any
Buy (long) setup rules
- The Wildhog NRP divergence indicator should show a hidden bullish divergence, indicated by sky-blue dashed lines below the price and below the line of the oscillating indicator and a green up arrow
- The Gann HiLo activation bars should print green bars to indicate that they are bullish
- At the confluence of the above rules, place a purchase order at the end of the candle
- Set the stop loss slightly below the entry candle
- Close the trade when a bearish divergence appears, indicated by a deep pink line on the price chart and the oscillating indicator, as well as a downward-pointing magenta arrow
Buy commercial example 1
Buy commercial example 2
Sell rules of sale (short)
- The Wildhog NRP divergence indicator should show a hidden bearish divergence, indicated by pink dashed lines above the price and above the line of the oscillating indicator, as well as a downward-pointing magenta arrow
- The Gann HiLo activation bars should print red bars to indicate that they are bearish
- At the confluence of the above rules, place a sales order at the end of the candle
- Place the stop loss slightly over the entry candle
- Close the trade when a bullish divergence occurs, indicated by a sky blue line on the price chart and an oscillating indicator and a green up arrow
Sell sample 1
Sell sample 2
Trade divergences as the focus of a strategy are already a proven system by many professional traders. The key is to identify the right filters and combine them with other rules that would complement them.
The Wildhog NRP Divergence Indicator is also a great indicator used by many retailers to help them trade variances, both as an entry and exit strategy.
Combining the custom indicators Wildhog NRP Divergence and Gann HiLo Activator Bars gives us the advantage of trading hidden divergences that represent an excellent continuation of trading and making trades that are based on the short-term trend based on the Gann HiLo Activator Bars to match.
It would also be best if you could combine this with correctly identifying the trend based on price movements, using the swing highs and swing lows on the price chart as a basis.
Act well !!!
Installation guide for Forex Trading Systems
The Wildhog Hidden Divergence Forex Trading Strategy is a combination of Metatrader 4 (MT4) indicator (s) and template.
The essence of this forex system is to transform the accumulated historical data and trading signals.
Wildhog's Hidden Divergence Forex trading strategy offers the ability to recognize various peculiarities and patterns in price dynamics that are invisible to the naked eye.
Based on this information, traders can accept further price movements and adapt this system accordingly.
Forex Metatrader 4 trading platform
- Free $ 30 to start trading immediately
- No deposit required
- Your account will be automatically credited
- No hidden terms
How do I install the Wildhog Hidden Divergence Forex Trading Strategy?
- Download Wildhog Hidden Divergence Forex Trading Strategy.zip
- Copy mq4 and ex4 files to your Metatrader directory / Experts / indicators /
- Copy the tpl file (template) into your Metatrader directory / templates /
- Start or restart your Metatrader client
- Choose the chart and time frame in which you want to test your forex system
- Right-click on your trading chart and move the mouse pointer over "Template".
- Move right to select Wildhog Hidden Divergence Forex Trading Strategy
- You will see that Wildhog Hidden Divergence Forex Trading Strategy is available on your chart
* Note: Not all forex strategies come with mq4 / ex4 files. Some templates are already integrated in the MT4 indicators of the MetaTrader platform.
Click here to download:
Wildhog Hidden Divergence Forex Trading Strategy