By Alessio Rastani
Here are the important points to remember about trading with LT Pro Divergence:
1. The yellow and magenta warning signals are NOT the same as a confirmed divergence. The warning signals are only giving you a “heads-up” about a potential divergence that could be about to happen.
2. The yellow and magenta warning signals do not require you to take any action when trading. It is still important to wait for a confirmation before pulling the trigger.
3. Confirmation of a divergence occurs when the red and cyan (blue) signals appear on the chart and on the indicator. Red lines are bullish divergence and cyan lines are bearish divergence.
4. Traders who want to trade more aggressively can wait for a close above the 8 EMA after a magenta warning signal as an alternative “confirmation” of a bullish divergence, and a close below the 8 EMA after a yellow warning signal as an alternative confirmation of a bearish divergence. (This is optional).
5. The best way to use the Pro Divergence indicator is to combine it with a higher timeframe in the manner shown in the above video. Then take divergence signals which are in alignment with the higher timeframe trend (see video).