Two Roads Diverged: Trading Divergences
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About this ebook
Two Roads Diverged: Trading Divergences
What you see on the surface is often deceptive, in trading, as well as in life. A trend may appear strong, while below the surface it may be weak and ready to reverse.
This book will teach you to use indicators for measuring the internal power of trends. When they confirm an uptrend, they tell you it's OK to hold or add to long positions. At other times they signal that the trend is suspect: it is better to exit, take profits, and even consider switching from long to short or vice versa.
A divergence is a disagreement between the patterns of indicators and prices. You'll find bullish divergences near market bottoms and bearish divergences near market tops. Some traders use these important terms loosely; this book will make them very clear by guiding you through several Reader Exercises. It will show you how to ride price trends with greater confidence and recognize upcoming reversals before they hit the crowd.
CONTENTS
How to Work with This Book
Free Updates & the Honor Code
Review of Tools
A Bullish Divergence: A Basic Definition
What is NOT a Bullish Divergence
A Bearish Divergence: A Basic Definition
What is NOT a Bearish Divergence
Reader Exercises
Entries, Stops, and Profit Targets
Additional Points on Divergences
Divergences in Other Indicators
Divergences in Multiple Timeframes
Scanning for Divergences
The Next Step: MACD Semi-Automatic
Conclusion
Thanks
Sources
About the Author
Alexander Elder, M.D. is a professional trader based in New York. He is the author of several best-selling books: Trading for a Living, Come into My Trading Room, Entries & Exits, and The New Sell and Sell Short (all with Study Guides). Dr. Elder taught psychiatry at Columbia University. His experience provides him with unique insight into the psychology of trading. Dr. Elder is a sought-after speaker at worldwide conferences. He is a co-director of SpikeTrade, a website for traders.
Dr Alexander Elder
Dr. Alexander Elder is a professional trader based in New York City. He is the author of Come into My Trading Room (Barron's 2002 Book of the Year) and Trading for a Living, considered modern classics among traders, as well as a number of other books. Dr. Elder was born in Leningrad and grew up in Estonia, where he entered medical school at the age of 16. At 23, while working as a ship's doctor, he jumped a Soviet ship in Africa and received political asylum in the United States. He worked as a psychiatrist in New York City and taught at Columbia University. His experience as a psychiatrist provided him with unique insight into the psychology of trading. Dr. Elder's books, articles, and software reviews have established him as one of today's leading experts on trading. Dr. Elder is the originator of Traders' Camps—week-long classes for traders, as well as the Spike group. Group members are professional and semi-professional traders who share their best stock picks each week in competition for prizes among themselves. He continues to trade and is a sought-after speaker at conferences in the US and abroad.
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Reviews for Two Roads Diverged
23 ratings4 reviews
- Rating: 4 out of 5 stars4/5Making the rules of divergence clear to ensure more profitable trades
- Rating: 5 out of 5 stars5/5great insight from Dr. Elder. Good and easy read for beginners
- Rating: 3 out of 5 stars3/5Interesting. One more tool to the trading arsenal; and looks a good and promising one.
- Rating: 5 out of 5 stars5/5good knowledge for beginer traders. this book is really suitable for traders who love trading reversal or counter-trend trading. From my opinion, i will not use this tool in my trading system as i want to follow the trend rather trader against it.
By the way, it's a good book. Thank the author!
Book preview
Two Roads Diverged - Dr Alexander Elder
Two Roads Diverged: Trading Divergences
Elder.com e-book Series
Dr. Alexander Elder
Copyright 2012 by Dr. Alexander Elder
ISBN: 978-1-4524-7698-8
Smashwords Edition
Published by elder.com
Two roads diverged in a wood, and I—
I took the one less traveled by,
And that has made all the difference.
Robert Frost (1874 – 1963)
DEAR READER: electronic publishing is still in its infancy. If the fonts do not to look right on your screen, try printing out this e-book – it will look fine on paper. Also, if you have any suggestions on improving or updating this book, please write to the author at book@elder.com
LEGAL: No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means without the prior written permission of the copyright owner.
Disclaimer of warranty: while the author has used his best efforts in preparing this book, he makes no representations or warranties in respect to the accuracy or completeness of the contents. The advice and strategies contained herein may not be appropriate for your situation. You should consult with a professional where appropriate. The author shall not be responsible for any loss.
Last revised: January 2012
Books by Dr. Alexander Elder
Trading for a Living
Study Guide for Trading for a Living
Rubles to Dollars
Come into My Trading Room
Study Guide for Come into My Trading Room
Straying from the Flock
Entries & Exits: Visits to 16 Trading Rooms
Study Guide for Entries & Exits
The New Sell & Sell Short (with Study Guide)
To Trade or Not to Trade: A Beginner’s Guide (e-book)
Table of Contents
How to Work with This Book
Free Updates & the Honor Code
Review of Tools
A Bullish Divergence: A Basic Definition
What is NOT a Bullish Divergence
A Bearish Divergence: A Basic Definition
What is NOT a Bearish Divergence
Reader Exercises
Entries, Stops, and Profit Targets
Additional Points on Divergences
Divergences in Other Indicators
Divergences in Multiple Timeframes
Scanning for Divergences
The Next Step: MACD Semi-Automatic
Conclusion
Thanks
Sources
About the Author
To find the truth, look below the surface!
What you see on the surface is often deceptive – in trading, as well as in life. A trend may appear strong, while below the surface it may be weak and ready to reverse.
We have indicators that measure the internal power of a trend. At times they confirm an uptrend and tell you it’s OK to hold or add to your positions. At other times they signal that the trend is suspect: it is better to exit, take profits, and even consider switching from long to short or vice versa.
A divergence is a disagreement between the patterns of indicators and prices. We find bullish divergences near market bottoms and bearish divergences near market tops. Many traders use these words very loosely – I want to make these important terms very clear. The purpose of this book is to help you ride price trends with greater confidence and recognize upcoming reversals before they hit the crowd.
Needless to say, I hold no monopoly on wisdom. I’ve learned my craft from those who went before me and still consider myself a student in the graduate school of