You are right about Divergence not working on its own. But, its presence can definitely add strength to your signal.
divergence is'nt a great signal on it's own....the only thing it's supposed to do is to "guide" you "assist" you "point" you towards a potential entry or exit....trust me stay away from these adjectives if you want to trade successfully. what happens when your good system tells you to enter short, but divergence states the opposite?? you perhaps will enter short only facing more stress than perhaps without knowing what the hell divergence is. or let's say you don't enter atall, perhaps loosing all those pips your system so dearly wanted you to gain...adding divergence is like having similiar indicators on top of each other to me, if i use stoch, macd, rsi, ac, ao, altogether, do you think i'll be able to trade? ofcorase not...but why? well each indicator has it's own way of telling you where the price will go, and when you use many indicating signals they will onyl confuse you...
divergence is something like this, if your system is based on it that's a diff story but if it's not why use something which just "hints" you where the price might go...
if you're trying to use it to stay out of trades, again that's not what it's used for... if you're trying to gain confidence of an entry or exit going with your system and a confirmation by the divergence...to me it's like doughting your system...think abt it.
I believe . . .
