Confluence factors for trade opening
This article talks about one more component of the trading system, i.e. confluence.
Confluence are additional criteria that, if met, are additional reasons for you to open the trade. They increase the chances of a given trade to be profitable. In other words, confluence if making a trade a higher quality one!
- fibo retracement level
- key support & resistance level
- key supply & demand level
- higher level timeframe trend (up, down, sideways)
- any criteria for trade opening can be a confluence in a different trading system
- anything else that you choose to look at
Here is how it works: let’s say you trade pinbars. A pinbar is your setup and a trade opening criteria. You see a pinbar on the chart. And before you open a trade, look at confluence factors above to decide if you want to trade this pinbar or not. Is it on a key level? In line with the trend? etc.
In other words, confluence factors are odds enhancers, as Sam Seiden calls it in his videos.