January 7

27 comments

The Best Stochastic Divergence Indicator for MT4 And Download

The Stochastic Oscillator is used to indicates oversold and overbought conditions along with the accompaniment of other clues. Here is a picture of the Stochastic Divergence indicator for MT4. The download for this indicator is at the bottom of the article.


In it, we see regular divergence, where the price continues in one way and the stochastic diverges in the opposite direction.

STOCHASTIC OSCILLATOR

I use the stochastic indicators to evaluate overbought and oversold areas particularly in the direction of the trend and at reversal points. In conjunction with resistance/support areas and other confluence factors, the overbought/oversold regions allow the trader to enter into a trend or reversal at the best price possible. The oscillator follows the speed or momentum of the price and not the price directly.

The Stochastic ranges between 0 to 100 with 20 and 80 being the oversold and overbought areas respectively. If we were to buy it would be best when the indicator is below or approaching the 20 region and if we were to sell it would be best to sell when it’s approaching or above the 80 region.

OVERSOLD/OVERBOUGHT

The following is a picture of the USD/JPY pair and its upward climb. Note the areas of oversold as good regions to enter the trade as a buy. This trade entry direction was based on the post-election surge in risk on sentiment with large amounts flowing into the USD.

This risk on sentiment resulted from a realization at the time of Trump’s plan to invest in
US infrastructure which the markets concluded would result in inflation and the FED raising their rates.

 

The red arrows indicate the buy points where one could enter given the extreme bullishness for the reasons just mentioned. I made money off of this but unfortunately didn’t plan a proper exit. I could have made substantially more if I understood the effect of news in the long term . Lesson learned.

Fundamentals and Sentiment should be used to help plan both entries and exits along with oversold and overbought conditions. In addition to overbought and oversold conditions, we will add the condition of regular and hidden stochastic divergence for MT4 trading platforms.

Again, a typical entry is based on a confluence of factors, most importantly the underlying sentiment mentioned above. Along with the sentiment, the other factors typically needed for confluence are support/resistance, the direction of moving averages, bouncing off of moving averages, certain candlestick patterns, etc.

Stochastics are only useful when taken as adding certainty to trade along with the other confluence factors mentioned above. Even more powerful are the two types of stochastic divergences mentioned below in combination with the other confluence factors for a trend continuation or reversal.

Regular Divergence will be used for trend reversal and Hidden Divergence will be used for trend continuation. In addition to entering a trade, Stochastic Divergence on MT4 indicators can be used for exiting a trade. How long should one stay in the trade? If it’s a strong sentiment like the one mentioned above, then as long as it’s still in the news. In regards to the chart above, news articles were mentioning this sentiment trend for days after the election.

The indicator could be used in conjunction with the news to arrive at a realistic exit. An overbought condition or regular divergence may be valid for an exit for a long trade or not depending on how strong the news is that causes a price movement in the first place.

I use the 5, 3, 3 exponential settings for the Stochastic Divergence Indicator for MT4 in the following examples. The indicator will be downloadable below. I'll try to find an MT5 indicator written in MQL5 for download, but the same parameters work in all cases.

REGULAR DIVERGENCE

A regular divergence is used as a possible sign for a trend reversal. I use it as trend continuation as well. If the price is making lower lows but the oscillator is making higher lows, this is called regular bullish divergence. After forming a second bottom, if the oscillator fails to make a new low, it is likely that the price will rise, as price and momentum are normally expected to move in line with each other.

STOCHASTIC DIVERGENCE INDICATOR FOR MT4

If the price is making a higher high but the oscillator is a lower high, then it’s referred to as regular bearish divergence. After price makes that second high, if the stochastic divergence indicator for MT4 makes a lower high, then the price may reverse and drop.

HIDDEN DIVERGENCE

Hidden divergence is used as a possible sign for a trend continuation. If the price is in a general uptrend and the price is making higher lows but the oscillator is making lower lows, this is called hidden bullish divergence. After forming a second bottom, if the oscillator make a new low, it is likely that the price will continue to rise, as price and momentum are normally expected to move in line with each other

If the price is in a general downtrend and the price is making a lower high but the oscillator is a higher high, then it’s referred to as hidden bearish divergence. After price makes that second high, if the oscillator makes a higher high, then the price may reverse and drop.

CONCLUSION

Installing the Stochastic Divergence Indicator for MT4

1

Download

Download the Stochastic Divergence indicator after signing up below

2

Copy

Copy the file  to the Metatrader Directory / experts / indicators /

3

Restart

Restart  Metatrader 4 and create a new chart

4

Custom Indicator

Find the Custom Indicators file in the Navigator button and right click on the  Stochastic divergence indicator label

I would not use this indicator alone for entry of a trade. As mentioned above, use it in conjunction with other characteristics: price action, candlesticks, resistance/support, and even other indicators such as an RSI Divergence indicator. Experiment, but don't do so without the incorporation of long/short term fundamental analysis or volume analysis. Technical signals alone are not sufficient to make profits in the long run.

STOCHASTIC DIVERGENCE INDICATOR for MT4 DOWNLOAD IS BELOW


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  • Hi,
    I have installed then MT4 is opened. But is it active in my chart, pls advise how can i ensure it and in indicators list in which name i can find.

    Also pls advise once installed does it show earlier divergence. Kindly clarify the above thanks.

    Regards,
    Premkumar

    • Once installed go to insert, indicators, custom as shown in the picture near the bottom of this article. Then scroll down to stochastic divergence.

      It should show up at the bottom of your chart and yes it shows earlier divergence.

  • Reading your article gives me memories of the first time i decided to engage forex trading without proper knowledge. i suffered great loss.

    it is possible to use more than two indicators but they do not always align. how do we know which is best? is there a limit to the number indicators that we can combine with the stochastic?

    • The Stochastic Oscillator Technical Indicator shows where a currency pair’s price closed concerning its ranging price over a fixed amount of time. From this, you can get an idea of when the price is oversold or overbought or diverging from the price itself. These can be turning points or points of price reversal from a primary trend or correction.

      Having said this, don’t use too many indicators. I only use two and no longer even pay attention to a moving average. Support and resistance, price action, candlestick patterns, and fundamental analysis plus sentiment are kings.

      I use the stochastic indicator to fine-tune my entries. They are the least important in my decision making.

  • Stochastic divergence is a Metatrader 4 (MT4) indicator and the essence of the forex indicator is to transform the accumulated history data. Stochastic divergence provides for an opportunity to detect various peculiarities and
    patterns in price dynamics that cannot be spotted by the naked eye.i have been using it for a very long time now and i must tell you its the best.

    • Yes, as I mentioned, I use it for either regular divergence or hidden divergence in the case of a trend continuation. There are similar formations for the MACD indicator, RSI indicator, or OBV indicator. I use the stochastic divergence indicator in the form of regular divergence to indicate overbought and oversold conditions as well at major support and resistance levels.

  • Nice, the best is always the best. But why only 4 and a half stars if it is the best? Do you read your charts with japanese candle sticks? Would you recommend using japanese candlesticks for long term trading, like 10 to 20 years? 

    I am curious to know what kind of trader you are… and aside from MT4, which forex trading platform gives the best advise?

    • Yes, I used Japanese candlesticks even for longterm trading. I using a Tradingview as well as MT4 but find the divergence stochastic indicator is better on MT4. With the divergence stochastic indicator on MT4 I can easily :

      -recognize regular and hidden divergences between the price and the indicator.
      -use it with trading strategies for trend reversal and trend continuation.
      – use it with expert advisors.
      – use it to time entries and exits.
      – set up alerts if needed for hidden, regular divergence and overbought/oversold conditions

  • hello there,Stochastic divergence indicator for meta trader 4 is a really good one…although I am not using meta trader 4 yet I would to download it…indicators are very important when it comes to trading forex as they help you take advantage of every trade you want to make….thanks for sharing…

    • You can check out the Mql5 marketplace if you’re trading with MT5. They may have the stochastic divergence indicator for MT5 there. You don’t want to spread yourself too thin with the number of trades that you take. The Stochastic Divergence indicator for MT4 will help you fine-tune your trades to those that are of higher probability.

      You need to rely on support and resistance zone as well as the overall direction of the upper and lower time frames. Even then you may not be ready to place a trade, certainly not with the stochastic divergence indicator alone.

      Test all this out using playback on Trading View. There you’ll find divergence forex indicators.

  • This would definitely take me a while to get used to, but from what I’m seeing here it looks as if it shows the trend of stock prices at a given time in the market – correct me if I’m wrong. If this is the case, I’d be interested in further looking into a product like the divergence indicator, since I’ve very recently (literally last week) have gotten involved in stock trading – trying to take advantage of this perpetual downswing we’ve been in. Anyway, I’m interested in the download but I definitely want to be on point that this is geared toward stock trading. Thank you for your help. 

    • This is a stochastic divergence indicator for MT4, which means it’s geared towards forex, not stocks. However, you can find a similar product on trading view at tradingview.com premium, which can be used for stocks. It doesn’t show the trend of stock; it shows areas of pullback or reversal. The regular divergence is used for a trend reversal, and the hidden divergence is used for pullback and continuation.

  • Thanks for breaking down how the Stochastic Divergence Indicator for MT4 works. I have asked several questions about this device, but now I know it will analyze and do a proper evaluation of the overbought and oversold areas. I believe staying abreast of the news alongside the indicator will guarantee a high percentage of my success.

    Once again, thanks a lot

    • Most of the indicators work similarly, whether it be the rsi divergence indicator, macd divergence indicator, cci divergence indicator, or other. What’s critical is areas that are overbought and oversold. These areas should be combined with areas of support and resistance for consistent results. The present news is not sufficient for your arsenal of information.

      You must be aware of previous news, and market expectations fo the currency. An excellent place to start is Ransquawk news. They offer commentaries to present market conditions for each currency.

  • This is fascinating information on an indicator for trades.  I agree that it should be used with other characteristics in the process of trading.

    I also agree that we should not just rely on technical signals.  I appreciate you sharing this information.  I am still learning how to trade and this information is very helpful.

    This divergence strategy is new to me but I will look forward to learning this.  The demo account is very helpful.  All the Best to your continued success.

  • While I have done stocks and EFT (Exchange-traded fund) trading, I never done forex trading. It’s very interesting for any investor to try this forex trading. Your education section definitely good for every newbie like me to find out more and learn how to forex trading online works. The demo account also will be helpful for someone to get life experience before we switch to real trading the transactions. I’ll definitely will sign up and try it.

    • Remember the free hidden divergence indicator / regular divergence indicator is available below. This stochastic divergence indicator operates a lot like other indicators such as the rsi divergence indicator, macd divergence indicator, and even the OBV divergence indicator. They work the same as they do on stocks. So, if you’ve used any of these in your stock trading you’ll be familiar with them already.

      Yes, use the indicator on a demo account first and don’t forget to combine it with other confluences.

  • i ventured into making money online by using binary option. one major challlenge was been able to predict the outcome of sales, rising stocks and the stable profit making products. getting the best indicators is the key to success and your review has done a great job here. you have been able to point out the best stochastic divergence indicators

    • It’s one of several stochastic indicators you can choose from. These help me decide when a currency or cryptocurrency is oversold or overbought. It’s one of many indicators that you can use to do this. For the stochastic divergence indicator free download, see above.

  • When I saw this article it excited me. I trade Forex almost daily. I do use the Stochastics in conjunction with the HMA and trend lines to confirm a trade. There is one type of trader who will only enter a trade at a turning point to take advantage of maximum profit. Another type of trader looks for clues to enter into a trend while it is in progress. Regardless what one does I feel it is critical to have a system where the winners, no matter if they are followed by a string of losers is big enough to provide a net profit. 

    Just like you experienced news can ruin a trade. I have been beaten up trading the GBP pairs with the news taking the GBP in sharp reversals that kept taking me out. Fortunately I used small lot sizes so I am still in the game.

    I am a funded member of the Apiary Fund where I trade their money. Since they manage our risk if we screw up we have to use their trading chart system called Alveo. You should check out what they do.

    Thanks for sharing this trading divergence strategy. I wish you much success in your trading.

    Edwin

  • Though  I am an active trader and I do that almost everytime, stochastic oscillator has never been a big turn on to me and for this reason, I have never given it much consideration. Though I know it is a very effective tool but then, I haven’t had any success with learning the use. Thumbs up to you for sharing this

  • Very interesting! Thank you for sharing, I have been dabbling in stocks for a couple years now, and still not quite getting the hang of it. Your charts explain things very nicely, easy to see that way. What kind of volume should I be looking for? The technical aspect seems simple enough, but obviously that is not enough to turn a profit. Stocks can be so confusing!

    • The MT4 indicator download I provided you with is not going to do you much good if you’re not using the MT4 forex platform. If you can find a similar script for your stock chart platform, then it’s well worth getting.

      I’m sure the same techniques would apply with stocks as they do with forex. Try studying some of the larger stocks to see how they move with respect to news and longer-term fundamentals.

  • Renko EA for MT4

    Wow! This could be one particular of the most beneficial blogs We have ever arrive across on this subject. Actually Fantastic. I’m also a specialist in this topic so I can understand your hard work.

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