A very popular trading technique is divergence trading.  A divergence is where a futures contract may have a higher price on a second peak, but the indicator may show a lower price.  This described as a Classic Divergence.  We will discuss Hidden Divergences in another post.

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This market seems very top heavy right now with a nice divergence at the top.  We have discussed divergences before and they do not always show direct reversals of the market.  However, there is a better than and 80% probability that you will get a reversal, so it is always wise to play the odds.

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How to Use Pivot Points with Support and Resistance

We have attempted to give you a background in trading.  Overall I learned to trade from Dr. Alexander Elder’s Book and Workbook, “Trading for a Living” back in 1996.  I actually failed the tests in the workbooks several times before I got it right.  I still think that that book is a classic and in a class all by itself. 

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The media, particularly television, has a profound effect on the development of public consensus which can drive movement in the markets. People believe what they hear in the news, particularly on television. The prognostications of television economists and financial experts bombard the public, molding public opinion and forming consensus. The problem is that the views of only a small number of people are aired, but aired repetitively, lifting their judgments from the realm of personal opinion to widely accepted fact. The savvy futures trader can make use of this phenomenon.

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Futures trading is a risky business. The untrained, unwary, unknowledgeable, undisciplined or sometimes plain unlucky can lose a fortune — and in an agonizingly short time. In fact, the SEC requires futures trading websites to post a disclaimer concerning the potential risks involved in trading commodity futures. You’ll find a full disclosure statement on my Futures Trading Secrets website.

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