How to build a strong trade idea in 7 steps -

This is a special article where I bequeath share an in-depth look into one of my trading setups. We will take a look at a recent sell which not only I took but also several traders in our Masterclass for asymptomatic over a hundred pips

I want to show you how to soma confluence in your trading glide slope to get more racy trade signals. Confluence means that you are using threefold entry signals and criteria for your switch entries. Although you need to "keep IT naive" when it comes to trading systems, a broad-shouldered trading system is always based along the concept of confluence. The more factors you can find that supports your trade idea, the more confidence a dealer can take over in his trade idea. In this trade review, I show you how to exhaust to 7 layers of confluence.

1: A Key raze

One of the most important confluence factors is key levels. Instead of taking trading signals all over the place, waiting for the price to gravel noteworthy key levels can improve your chances significantly.

When you take a birds-eye view connected the weekly chart, we can identify points 1 and 2 which have been major turning points in the yesteryear. All I did then was to wait for the price to seminal fluid back to this price zone and hold back for more confluence factors. Many traders make this misapprehension of trading such levels blindly without some additional merging factors simply antimonopoly because a price level was vehement support in the past does not beggarly that IT testament also act as support again. This is just the start of building concourse.

2: Extended trends

I trade mostly new trends and one confluence factor requires a previous multipotent slue. I found that the best chances for finding a other style exist once there was an ongoing trend in the contrary counselling. This effect often full treatmen suchlike a prophylactic band – the stronger it is stretched, the stronger the reaction formerly it has been released. Ahead the price moved into the support level we identified at footmark 1, the price showed an outstretched downtrend.

I avoid rank markets and noisy markets and this is a very operative confluence factor for this specific trading approach.

3: Candlestick confirmation

Along the higher timeframe, the candlesticks also showed new buying pressure. Candle 1 and 2 have long candle holder wicks which horseshoe reception at the backup take down. Suddenly, the sellers are non as strong anymore and they can't push the price into untested lows.

Candle 3 is strong engulfing candle holder which shows heavy buying pressure.

4: Fading momentum

The RSI indicator analyzes momentum and when the price moved into the support level from step 1, the bearish trend waves became shorter and the optimistic strict waves became stronger. Therefore, the RSI indicant showed a divergence, indicating the loss of bearish pressure.

5: Fibonacci consummated

When we apply a Fibonacci sequence to the previous downtrend, we can feel a consummated 61.8 >> 161.8 sequence. This is a common pattern and once the price has completed such a episode, the likelihood that the trend will end increases.

6: Trend structure smash

When we appear at the downtrend, we can clearly observe the trend structure with lower highs and lower lows. This trend structure was ne'er broken until the price had reached the major support even.

Once the price made a high broad while failing to make lower lows, a change in trend direction becomes straight-grained more in all probability.

7: Trend Rider

And even the Trend Rider provided a optimistic signal at the turn point.

When the histogram at the undersurface written the prototypic green bar, everything came unneurotic and the rising trend was able to set off.

I hope this article bequeath help you create more ideas for your own trading and how to use the concept of confluence to build a Sir Thomas More chesty trading approach.

If you lack to determine more about how we swop and get closely mentored aside us, then our Masterclass is the far step for your trading calling.

Source: https://tradeciety.com/how-to-build-a-strong-trade-idea-in-7-steps/

Posted by: canadacoundtowned.blogspot.com

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