So we know that two signal lines with divergence present is the perfect entry, but I can't honestly say I'll always wait for the second divergent peak/trough. This is because there are times when there is only one peak/trough that forms.
Trading the first two signal line hi/low is more risky and one should of course wait for the stochastics to be OB/OS. Sometimes price doesn't make it back after turning to the first or second signal line.
One can either set a stop when trading the first hi/lo, or if it doesn't work out plan on averaging in again on the divergent peak.
In the chart below, only trade #3 is the perfect entry, but all four had two signal line confirmations and would have been successful. In trade #2, we could have set our stop below the first signal line in case it didn't get to the second, which it didn't.
Trading the first two signal line hi/low is more risky and one should of course wait for the stochastics to be OB/OS. Sometimes price doesn't make it back after turning to the first or second signal line.
One can either set a stop when trading the first hi/lo, or if it doesn't work out plan on averaging in again on the divergent peak.
In the chart below, only trade #3 is the perfect entry, but all four had two signal line confirmations and would have been successful. In trade #2, we could have set our stop below the first signal line in case it didn't get to the second, which it didn't.