Confluence is beneficial because it does more than show you a good setup in isolation — it shows you a good setup in context of the market. This is essential in Forex to avoid fakeouts, 22/6/ · Trading confluence is an area in the Forex market where two or more structures come together and form a high-probability zone for buying or selling. It is a bit challenging to 11/4/ · Confluence: the coming together of two of more “things”. In our case as Forex traders, these things are factors which can influence future price action. See how that works? ... read more
Sure, they lose on some customers, but they know that over the course of a year those odds will play out in the form of profits. So start treating your trading account the way casino owners treat their business, by stacking the odds in your favor.
So would this pin bar be a valid trade setup to go long? We have all of our CF boxes checked. Think of each CF as another 15 or 20 percent added to the odds of price moving in the desired direction. The more CFs a price action setup has, the better.
But please be careful with this! That about wraps up this lesson on price action and confluence. The best way to build confidence with any trading strategy is to immerse yourself in it, so start observing and tracking price action setups that have confluence and see for yourself. Use the comments section below to ask your questions or just leave a comment.
Save my name, email, and website in this browser for the next time I comment. In other words the setup has room to run. There was an inside bar prior to the pin bar 2 bars prior.
What was the reason for not taking that? No reason not to take it, this chart was just just illustrating the pin bar. Thanks for the reply, Justin. But the pin bar would have taken you out if you had placed your SL below the inside bar for better RR, right? I guess what I was asking is how you could have filtered that trade out to prevent the loss. If the stop loss had been below the mother bar you would have been okay.
Like all technical analysis, they can be psychologically important. Philasande, it just so happens that I wrote about false breakouts last week. i had been applying this strategy. but what is getting me confused is when and how to enter a position.
Hi Justin , Nice explanation about confluence factors, the most I like was the listing it down as CF1,2…. its a more systematic way to trade.
thanks for this new Idea. Ciao Justin oggi non lavoro io lavoro 7 giorni su 7 perchè sono sugli impianti di sci quindi sto studiando le tue lezioni, CHE BELLE!!!!! Le sto leggendo piu volte perchè la traduzione non è perfetta, ma cosi facendo le sto duplicando meglio.
Sapere dove entrare e mettere gli stop loss e i TP fa molta differenza!!!! Sapere che il Pin Bar, Inside Bar, e Engulfing sono i 3 indicatori che usi rende tutto piu facile e semplice, uniti al fatto che usi tempi giornalieri diventano molto affidabili. Lo stress sta sparendo ora perchè sento che il mio controllo è aumentato, grazie alla conoscenza che mi hai regalato,di conseguenza la mia responsabilità è piu alta. Queste 3 cose: controllo-responsabilità-conoscenza,vanno assieme,quindi basta aumentarne una che aumentano anche le altre due.
GRAZIE TANTE JUSTIN!!!!!!! Hi justin, how about fakey set-up? I dont usually trade an inside bar because of possible false break above the mother bar.
Thank you for this lesson which is clear and useful like all your lessons and analysis. Can you suggest a strategy for trailing the stop loss in order to protect profits without closing the trade premature?
Stacking the Odds in Your Favor. Quick Tip: Always draw your support and resistance levels first. This will ensure you mark the most obvious and influential levels first. The rest of the structures mentioned above in the list of the A1 section are the same for the A2 to fulfill an entry. Moreover, both the A1 and A2 require showing space so the price can move on to higher timeframes. The last one is the A3 setup. Generally, A1 and A2 patterns are preferred by traders more.
However, when nothing is there on the horizon, it is best to trade A3 setups because of its lower risk. If a level of a round number gives way with room seen for price running, traders can consider trading any retest of that level viewed thereafter.
However, according to the way you trade, a bullish or bearing rotation candle must accompany the retest. By rotation candle, we understand a candle bouncing from the level to form a full or at least very near full-bodied candle. It is opinionated that buyer or seller intent is suggested by it.
Of course, having these levels bolstered by structures like trendline is also preferable. Traders that have full-time jobs may be able to swing trade only. The most they can take a look at the charts maybe once or twice at most. So, a 4-hour timeframe seems to be a good option for these people.
Any lowered than this is considered intraday. When a trade is not only executed but also liquidated within the same day, it is called intraday. If it is below the hourly timeframe, then it is considered an intraday scale. If you are into this type of trading, then you will need to spend several hours in front of the computer each day. On another note, you can also consider trading long term that involves looking at the charts only a few times per week. However, this is slow.
Thus, it is not suitable for everyone. Support and resistance confluence can help the traders to see areas where swings or reversals may take place. However, you must keep in mind that no form of analysis can predict future price movements accurately. Instead, trading is unpredictable and it is all about possibilities. By viewing a down-trend pause during support or an up-trend stall at resistance, we can only see an area where the reversal in price is likely to take place.
Another point is price action that signals potential reversals. As a trader, you should take this opportunity for a potential trade entry that comes with a positive risk-reward ratio as well. By doing this, you can avoid the top trading mistake, which most Forex traders make to end up with financial losses.
Many traders feel that confluence trading areas have a wonderfully strong edge.
What is confluence and why is it so important when trading the Forex market? Before we get into the details of how confluence can improve your trading, we first need to understand what it is.
The dictionary has the following definition. In terms of trading Forex, we can say that confluence is when two or more factors come together at the same place on a chart. In other words a strong trend might be one factor, a price action buy signal might be a second factor and so on. I think I can be so bold as to say that consistent profits is the goal of every serious Forex trader. So why then do only a small portion of traders make it to this level?
It all comes down to the use of confluence. Those traders who can be called consistently profitable have found a way to identify and harness the power of confluence in a way that puts the odds in their favor. The ability to put the odds in your favor is what trading is all about. This is where the combination of various Confluence Factors comes into play. For all intents and purposes we can view confluence as putting the odds in your favor. In other words the more Confluence Factors present on any given setup, the greater the odds are that the setup will move in the intended direction.
We all know that trading with the trend, or path of least resistance, is always a good idea. The second thing we notice is a key support level that has just come into play. The market has retraced from a recent high and now appears to be finding support at this level.
With respect to the key support level, price action has now formed a bullish pin bar from this level. Pin bars can be a great indicator that the market has reached a swing high or low and is about to reverse.
Last but not least we notice that the tail of this bullish pin bar intersects with our 10 and 20 exponential moving averages that we use as part of our trading strategy. So it appears our moving averages are also providing dynamic support in combination with the key support level. You get the idea. The list could go on and on and the factors you identify will vary depending on your style of trading.
However the point to take away from all of this is that the more Confluence Factors we have on any given setup, the better the odds are that the setup will move in the intended direction.
This works both ways, however. Just as a trade setup with more factors can be thought of as higher quality, a setup with fewer factors is of lesser quality. This is when patience is so important — to have the ability to wait for the trade setup which has four or five factors instead of taking the setup that has just two or three factors.
Instead you want to focus on the bigger picture. Becoming a profitable Forex trader is a marathon, not a sprint. Just as a casino doesn't expect to win every hand, you shouldn't expect to win every trade no matter how many Confluence Factors are present. Having said that, the casino knows that by the end of the year it will have made a sizable profit because the odds are stacked in their favor. So start thinking like the casino and begin using confluence to stack the odds in your favor.
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Please disable AdBlock or whitelist EarnForex. Thank you! EarnForex Education Guides. What is Confluence? Confluence : a situation in which two things come together or happen at the same time. Putting the Odds in Your Favor I think I can be so bold as to say that consistent profits is the goal of every serious Forex trader.
So Confluence Factor 1 becomes a strong uptrend. com If you want to get news of the most recent updates to our guides or anything else related to Forex trading, you can subscribe to our monthly newsletter.
11/4/ · Confluence: the coming together of two of more “things”. In our case as Forex traders, these things are factors which can influence future price action. See how that works? Confluence is beneficial because it does more than show you a good setup in isolation — it shows you a good setup in context of the market. This is essential in Forex to avoid fakeouts, 22/6/ · Trading confluence is an area in the Forex market where two or more structures come together and form a high-probability zone for buying or selling. It is a bit challenging to ... read more
Next, they waited for potential reversal patterns to form. Because confluence trading setups do form some of the highly explosive and high probability trading setups you can ever find in the forex market therefore you should know what to look for and how to trade them. If you simply placed a pending BUY order above the high of either of these two bars and held until the first close below the previous candle, it would have resulted in a profitable trade. Save my name, email, and website in this browser for the next time I comment. Systems are as varied as personalities.The key is in being prepared, knowing where these areas of confluence are, then acting on then based on your triggers. You may want to confluence trading in forex it risky and make as much as possible. Note how the 1. The ability to put the odds in your favor is what trading is all about. The key problem with confluence trading is that you may start trying to use too many signals to buy or sell.