UNDERSTANDING SUPPORT AND RESISTANCE AS A BEGINNER ( The End)
This is the concluding part of this lesson. So, in case you missed part 1-6, check them on my profile .
What is confluence in technical analysis?
Confluence occurs when multiple ideas or strategies are used together to form a single, coherent idea or strategy. In investment advice, confluence relies on building a layered strategy drawing from several types of analysis or theory that can achieve investors' goals within their risk profile.
This, Confluence trading” is when you combine more than one trading technique or analysis to increase your odds of a winning trade. You use multiple trading indicators that all give the same “reading”, as a way to confirm the validity of a potential buy or sell signal.
So far, we’ve discussed what support and resistance are, and some of their different types. But what’s the most effective way to build trading strategies around them?
A key thing to understand is a concept called confluence. Confluence is when a combination of multiple strategies are used together to create one strategy
It very important to note that, there are no guarantees when it comes to trading. While trading patterns can be helpful, past performance does not imply future performance, so you should be prepared for all possible outcomes.
Historically, the setups that are confirmed by multiple strategies and indicators tend to provide the best opportunities.
Some successful confluence traders might be very picky about what setups they enter – and it often involves a lot of waiting.
However, when they do enter trades, their setups tend to work out with a high probability.
Even so, it’s always essential to manage risk and protect your capital from unfavorable price movements. Even the strongest looking setups with the best entry points have a chance of going the other way. It’s important to consider the possibility of multiple scenarios, so you don’t fall into false breakouts or bull and bear traps.
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