Divergences
In this page, you will learn the meaning of all the settings in the ‘Divergences’ section in the settings.
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Before we talk about the settings, first we need to define some terms.
What is RSI?
The RSI is an indicator that stands for ‘Relative Strength Index’.
What are Divergences?
A divergence occurs when price moves in the opposite direction of the oscillator (RSI, in this case). In other words, a chart might display a change in momentum before a corresponding change in price.
When you subscribe to the StratBuilder, you also get the ‘Algo Divergences’ indicator, which can visually display all 4 types of divergences. The StratBuilder is using the same divergences that are displayed in the ‘Algo Divergences’ indicator.
The 4 types of divergences are:
- Regular Bullish Divergence - Lower low on price action and higher low on oscillator
- Regular Bearish Divergence - Higher high on price action and lower high on oscillator
- Hidden Bullish Divergence - Higher low on price action and lower low on oscillator
- Hidden Bearish Divergence - Lower high on price action and higher high on oscillator
The Settings
Entries
The settings in this section are pretty self-explanatory once you understand the terms. When you check a box for entry on any particular divergence, the divergence must be present since the amount of bars from ‘Bars XYZ Div is Valid’ to the bar of entry.
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Exits
When you check a box for exit on any particular divergence, it will exit the trade once that divergence has been confirmed.
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Threshold