Method
Confluence
Several reasons at the same price, used to be selective.
Widely taught. The Exchange can test it on public price history and will say what it finds.
No published test that more stacked chart factors improve results. The Exchange can test this on the trader's own history, where the count is recorded.
What it is
Confluence means factors line up at one price: a level, a trend, an average, a retracement, a candle. It is a way of asking for more before acting.
What it suggests
Factors calculated from the same prices are not independent confirmations. A moving average, a retracement and a candle all come from the same price series, so stacking them adds less than it feels like it does. Counting different kinds of reason (structure, level, momentum, timeframe agreement) is more honest.
How to check it
Write the required number and kinds of factors in the plan, and record the count on every trade so the Exchange can check whether more factors actually meant better results for that trader.
Common mistakes
- Adding factors until something qualifies.
- Counting the same information twice.
How we will test it
On public price history, never on anyone's account. Until it is done, the note above is all we can honestly say.
- Cases: trades tagged with a confluence count
- Measure: average R by count, with the sample size shown
- Window: closed trades
- Compared with: trades with the lowest count
Related lessons
Written in our own words. Education only, not financial advice.