Day (and Position) Trading the FOREX market is now more popular than ever as many FOREX brokers have introduced contracts that are sized for the individual FOREX trader - rather than for large institutions. This means that the individual investor can participate in the global currency markets with mini-contracts and a mini-pocketbook.

These special trading indicators are very well-suited for this purpose, as they help reduce the stress of trading the long hours associated with FOREX trading.

Examples:

Here is a four-chart example of how to put a few of the MTA day trading indicators to work in the FOREX market:

Although this could apply to any chart time-frame, or any market, let's look at a 15 minute chart of EURUSD.

First of all, let's examine "divergence" by showing the MTA LRS Divergence indicator. This is an excellent divergence indicator. My point, however, will be that by itself, like any other indicator, it is unreliable. e.g. it needs confirmation. (By the way, I have also added PapaJohn MA to the chart. With this Moving Average we can tell by the color and the angle of the line when we are going against a very strong market.)

I labeled these LRS divergence signals 1 thru 7. They are all "technically" correct signals. In other words, the market made a higher high while the indicator made a lower high (for a short signal) or visa versa for a long (green) signal. As you can see:

Signal #1 would not have been a good decision to go short. (But look at the angle and color of PapaJohn MA!)
Signal #2 was a bad call.
Signal #3 was a good call.
Signal #4 was a good call.
Signal #5 was a bad call.
Signal #6 was a bad call.
Signal #7 was a good call.

Summary: 4 bad calls, 3 good calls, again affirming we need more than just "divergence."

Let's throw the same chart up with our LRS Turn-3 indicator. Here I labeled only the signals I would have felt comfortable with because of PJ MA confirmation:

Noteworthy about LRS Turn-3:
1) It gives a signal and may continue giving signals in the same direction as the market keeps moving. This gives what may appear to be repetitive signals, but they are confirmation of a continuation.
2) The first color change is significant. More significant than the 2nd red signal is the 1st red signal, and visa versa.
3) We have what is called 1BR. (1 Bar Reversal.) These are stronger signals.
(You can watch a brief video on this trading indicator at: LRS Turn-3 video).

About these six signals:
1) 1st green in a continuing upward market with PJ MA confirmation.
2) The 2 is labeling the red dot to the right of itself, not the one above it. This is the 1st red (after a green) with PJ MA confirmation. (Some of the move is already underway, but that is the price you pay sometimes waiting for confirmation.)
3) 1st red dot with PJ MA confirmation.
4) Note the 1BR on the PJ MA. (Actually, it was 2 bars cyan, but still a strong downward indication). This is the 1st red dot after that.
5) Look above to see a clear 1BR on the PJ MA and then a red dot on LRS T3.
6) This is the 2nd green dot on LRS T3 because we had to wait for PJ MA confirmation.

Next we have the same chart with our Shem's MACD and Shem's Stochastics added. Now we have the makings of a true trading chart. I labeled the same signal points as on the previous chart.

You can see the video on either of these indicators at: Shem's MACD video or Shem's Stochastic video.

As you can see, signal #5 was the only one that did not have unanimous confirmation from Shem's MACD and Shem's Stochastic indicators.

This time I added the trend line to show where Beth (MTA 's human, female voice) would have announced (or paged your text messaging) with a break-out, which confirms again what the other indicators are saying.

As you can see, 4 of the 6 signals had trend line confirmation. The other 2 had a trend line either just before or just afterward.

Personally, I don't believe divergence is a very strong indication by itself. On my board member approach, I think of myself as the chairman of the board (making the final decision) and each of the indicators I use as individual board members. I give divergence only 1 vote, whereas Papa John MA, Shem's MACD, Shem's RSI and Shem's Stochastic get 2 votes and Voi-Trend line gets 3 - in terms of importance. (These values are something that each trader works-out for him/her self.) If the board has a mixed reaction to the market, I don't trade. If several of the board members vote strongly for a certain direction, I seriously consider taking the trade. You may want to consider using a similar approach in your trading decisions instead of putting too much value on any one indicator.

Good trading,