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® “Home-Study Course” Study Manual Page 18

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So, you look for a reason to go long, an entry signal. One comes
along and you take it. You think to yourself that you would not
have normally taken that signal if you did not see bullish
divergence but with bullish divergence you feel you should. Prices
then continue downward even lower and the bullish divergence
remains bullish so you stay with your long position.

“…Can’t go much lower…” you say to yourself. It does go lower
and now you’re worried but you do not want to sell and take the
large loss, so you hold on. After all, the MACD divergence is still
bullish but not as much as before.

Soon the divergence turns into NO divergence and instead the
trend down becomes apparent and you now must sell out. You
feel depressed, frustrated, and betrayed by your MACD
oscillator! If the oscillator had not been there you would never
have taken the trade to begin with.

2. Opinion - Example Two:

You get a trading signal to go long but this time your
STOCHASTIC oscillator indicates that prices are overbought
already, so you do not take the long position. The so called
overbought STOCHASTIC oscillator formed an OPINION in
your mind to not take the trade. Now you sit there and watch a

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