Trading EURUSD using volume divergence, which shows that the market is going down, is shown in the video below.
Trading EURUSD Using Volume Divergence
The entry on this trade was rather simple. Price was at the 45 minute chart ATR stop with diverging volume. Since this is the lowest point of risk, the trade was entered using a 15 pip stop. Later on in the video, the stop was pulled down to 10 pips and is currently at two pips from entry.
What identified that the ATR would hold on the 45 minute chart? The ADX magenta peak on the 720 minute chart plus a potential for a magenta peak on the 1440.
While the stop could be trailed closer to price, the trade has the potential of moving down another 100 pips. For short quick profits, you could trail the stop closer but for the bigger trades, you need to allocate breathing room. Since this is a slower period for the markets, trailing the stop using two highs back is better than choking the potential move.
Additionally, in the video I show how the market noise form the lower timeframe would affect your trades. Knowing when the markets slow down and which timeframes to follow are instrumental in taking the most profits out of the market.
The volatility series that I am currently doing on the markets identify precisely when the markets slow down so traders can stay with their trades longer (takes longer for the trades to work out when the volatility decreases). The lower the volatility, the more noise that is produced on the lower timeframes (which means frequent stopouts).
By increasing our timeframe, we are able to give the trade a little more breathing room while still maintaining a low risk / high reward trading methodology. In other words, instead of expecting the trade to work out immediately, by identifying the slowdown in volatility, we give it a little more breathing room.