What does Tom use for his own personal trading? These are my notes from chapter 7 of the Tradementor series with Saxo Bank.
- Records the speed of prices
- Tracks the strength of a trend
- For a given time period
- RSI, MACD, Stoch, ROC, CCI
- They all measure 2 things –
- Overbought or oversold
- Divergence from price
Ignore OBOS. Markets can stay overbought or oversold for longer than you can stay liquid. Forget about crossing RSI’s. Trading is not that easy.
- Momentum precedes price
- Leading indicator
- Price highs vs momentum highs
- Price lows vs momentum lows
- But don’t trade divergence alone*
- Double/triple top/bottom, H&S
- Candle patterns, doji’s
Trading is really simple. Buy. Sell. Or do nothing. But is isn’t always as easy. It’s like being a hunter. Patiently sit and wait before you strike. And sometimes you miss.
- Everyone looks for divergence
- So you need something different
- Enter David Paul
- Welcome to reverse divergence
- Refer to Chapter 12