Momentum Divergence Indicator

MT4 Free Download

Introduction to the Momentum Divergence Indicator

The Momentum Divergence Indicator is a forex indicator that automatically recognizes divergences between price and momentum indicator. It draws two lines: classic divergence takes place when the lines are solid, while reversed divergence occurs with dotted lines. Additionally, it marks the potential entry points with buy/sell arrows.

The Momentum Divergence Indicator fits all kinds of timeframes and currency pairs. It is displayed in a separate window placed just below the main trading chart. The default settings can be modified directly from the input tab. Feel free to experiment with the settings and parameters to fit your personal preferences.

How does it work? How to apply in trading?

Trading Rules Explanation

The Momentum Divergence Indicator plots a buy signal when the price bars create a lower low and the Momentum Divergence plots a higher low at the same time. Conversely, a bearish divergence is considered to occur when price bars form a higher high, while the Momentum Divergence indicator makes a lower high.

Buy Signal

Follow these steps for a long trade:

Momentum Divergence Indicator provides buy arrow
Price swings higher from recent low swing
Buy trade is triggered after the above conditions are met
Set stop loss a few pips below the last swing low of the market
Take profit or exit whenever the Momentum Divergence Indicator provides opposite signal or use your own method of trade exit

Momentum Divergence Indicator Example of Buy Trade

Sell Signal

Follow these steps for a short trade:

Momentum Divergence Indicator provides sell arrow
Price swings lower from recent high swing
Sell trade is triggered after the above conditions are met
Set stop loss a few pips above the last swing high of the market
Take profit or exit whenever the Momentum Divergence Indicator provides opposite signal or use your own method of trade exit

Momentum Divergence Indicator Example of Sell Trade

As always, to achieve good results, remember about proper money management. To be a profitable trader you need to master discipline, emotions, and psychology. It is crucial to know when to trade, but also when not to trade. Avoid trading during unfavorable times and market conditions like low volume/volatility conditions, beyond major sessions, exotic currency pairs, wider spread, etc.

How to set up the Momentum Divergence indicator in MT4?

Installation Guide

Download the Momentum Divergence.rar archive at the bottom of this post, unpack it, then copy and paste the Momentum Divergence.ex4 or Momentum Divergence.mq4 indicator files into the MQL4 folder of the Metatrader 4 trading platform.

You can gain access to this folder by clicking the top menu options, which goes as follows:

File > Open Data Folder > MQL4 > Indicators (paste here).

Now go to the left side of your MT4 terminal. In the Navigator find the gauge name, right-click it and select Attach to the chart.

Bottom Line

The Momentum Divergence indicator is well worth adding to your trading collection. A good forex indicator will most probably enhance your chance of success. Nonetheless, remember about having realistic expectations. Just like any other technical analysis tool, is not capable of providing accurate signals 100% of the time. Thus, this forex indicator provides false signals occasionally. Its performance will vary significantly depending on market conditions. Feel free to develop your own trading system based around it. Don’t forget that we still have more great free forex MT4 indicators to download and try.