Hi Vishal,
divergences are sometimes good, however they alone must not be primary tools for taking a trade.
Tell me if you wanna know about a FRENCH person who does not know hindi at all , and u ask him in hindi? you need to learn french first!
in the same way there is a language of markets! please try to concentrate on true market language. Market structure is one of the languages that we can learn and profit a lot! Howere knowing just A to Z is not enough, you need to learn the framing of sentences and get the good communication between you and market so that you understand what it speaks.
ahh!! is it confusing? please read Saint's post and u will know wht i wanna say!
* my way of using RSI or any other divergence is this:
spot the higher time frame trend.
look for lower time frame opposite trend, spot divergence in lower time frame and trade according to higher time frame trend.
eg. if 60 min charts are clearly in uptrend, go to 5 min time frame and only take the bullish divergences and vice-a-versa.
In fact Big boys have very simple methodology to trade , they only see multiple time frames and increase their success rate amazingly! However, today indicator based trading and their modifications are facinating people so much. But markets keep on changing, on every time frame from 5 min to monthly! these indicator based systems dramatically change with changing periods. only wht not changes is the MARKET LANGUAGE on all time frames! Learn to learn it!
Take care,
AUM,
Winston