What does divergence mean in day trading?

If you don’t know, divergence means to separate from something. In trading, watching the right technical indicators diverge can help you a lot. Divergence day trading is a great way to get a sense of where a stock will move next. And when it comes to momentum, we all want some kind of peek into the future, right?

How does convergence day trading work?

Divergence day trading works when the price of a stock moves away from the current trend. That’s according to the indicator and oscillator of your choice. With convergence trading, two separate trends move closer to each other. This strategy is more commonly used by trading firms that seek to profit from arbitrage.

How difficult is it to trade divergences?

In all fairness, trading divergences is a relatively difficult thing, especially for new traders. That’s because divergences don’t provide an initial signal of when to buy or when to sell. Still, you can use several indicator-specific strategies to trade these divergences.

What makes a great setup for a divergence day or swing trade?

It’s important to watch when either of these indicators diverge from the price action on a chart. That’s what makes a great setup for a divergence day or swing trade.