How Can You Create A Fully Automated Or Manual Trading Strategy Using A Divergence Constructor?

By Author: Donald Ciricillo
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I often receive letters from my clients, who ask me to recommend the most accurate divergence indicator or a combination of indicators. There is no clear answer to this question because, first of all, there are many market phases and no universal indicator works equally well in different conditions. The second point is that your trading preferences will influence your choice of indicator. For instance, those who prefer to scalp should go for an indicator that is fast - even if it affects the accuracy of the signal. If you have a target to trade 100 pips or more, then the accuracy of the signals will be important than speed. Giving a straight answer about indicator combinations is not easy so we might be able to make this easier by creating an algorithm.By using a combination of signals from 35 divergence indicators, our company has developed Divergence Constructor. The list includes divergence indicators which is based on common and most popular indicators.Divergence Constructor Description: http://iticsoftware.com/divergence-constructor.pdfDownload link: https://s3.amazonaws.com/iticsoftware-products/divergence-constructor3.0.zipDivergence ...
... Constructor can create unique and universal indicators by using the signals from several indicators. A unique and more effective strategy can be developed with universality of indicators. As our tool doesn't need you to buy several indicators you can save money. You can choose a combination and only then buy the necessary indicator. The most important factor is not having to use the time to select combinations but you can review them all.How to choose the indicators is the next most important aspect. It is not necessary to investigate all the possible combinations of 35 indicators as it would take too long.Let's divide all the Forex strategies into two types: strategies with targets up to 10-30 points and strategies with targets from 50 points and above.10 - 30 point target strategiesCombining a volume indicator and momentum indicator and / or a market volatility indicator is the best way to develop this strategy. Indicators that work well with a support and resistance level indicator and the trend will be needed. Indicator gradation can be found here: http://metatrader-indicators.com/2012/07/11/super-divergence-indicators/It will come as no surprise that positions are going to be opened and closed on or next to resistance and support lines. If you want to know where to place a stop-order then support and resistance lines are a good indicator. The indicator that works with the trend well is necessary for analyzing a possible resistance line breakout on a signal of a hidden divergence.Let's examine an example of developing a scalping strategy for the currency pair EURUSD (TimeFrame - M5). We will use I as the Momentum indicator and OBV as the volume indicator. You can see that the indicator gives quite accurate signals at the first approximation.The settings of Divergence ConstructorDrawRegularDiv = trueDrawHiddenDiv = false; The hidden divergence has been deactivated as it is a signal to determine trend duration.. It is our goal to attempt to find reversal zones.CCI.On = trueOBV.On = trueOther divergence indicators = falseOur next stage is to look to change the indicators and make comparisons between signals over a period spanning several months. Depending on your trading preferences you can add more indicators or filter inaccurate signals but it will decrease the number of accurate signals too.As I mentioned above, it is recommended to use support and resistance lines for specifying entry and exit points and also placement of the stop loss order. You can use the indicator i-BJF-SupResLines-Sig.mq4 for this purpose. To determine the market conditions we will use the indicator that works well with the trend. For example, we will use MACD. We will look at the signals of trend continuation - hidden divergence signals.The Divergence Constructor settingsDrawRegularDiv =falseDrawHiddenDiv = true MACD.On = trueOther divergence indicators = falseThe indicator will reveal the areas where the trend of the market lasts.The 50 point plus target strategy Combining trend and volume indicators is more appropriate for strategies like these and its recommended to use support and resistance lines to define entry points. As price nears the line you should assess the signal of the hidden divergence and decide if the trend is going to continue or if you are better off closing or reducing the position. You should carry out analysis on older timeframes as well as the timeframe you are using.A well-chosen combination of indicators is 60% of the reason for success of any manual or automated strategy. You can make a more successful strategy by creating money management rules and further options. Visit our web page and read more about standard options, which we can add to your strategy: http://iticsoftware.com/extra-optionsGood luck.