STEEMIT CRYPTO ACADEMY S5-W6:: HOMEWORK POST ON CONFLUENCE TRADING FOR PROF.@reminiscence01::BY @GI-DE-ON

I would like to use this medium to say a big thank you to God for making it possible for us to be part of this week homework post. I say a warm welciso everyone and a Merry Xmas in advance to all. All Thanks to Prof. @reminesence01 for this week's lecture and the entire academy for having us.*

It would interest us to know that in the previous lesson's held we have been able to discuss various trading patterns, techniques that would enable us trade the crypto market with ease and been sure of having at least 90% profit of success from various trading performed.

That is not withstanding, with all those techniques and patterns in place and been used it is still very important for a trader to have like a backup plan in place, which can be use as a tool to validate or recheck the market setting before proceeding.

This plan can therefore be the utilization of multiple trading techniques and trading patterns been put in place in one chart. Hence, this would therefore lead to today's topic which is known to be CONFLUENCE TRADING

In a simple sense, this can be said to be the utilization of many trading tools. For a full insight on this topic, this would therefore be discussed in the subsequent paragraphs below.

The term confluence trading*, in a simple sense, is simply the utilization of multiple/several trading tools for trading with major reason for the confirmation of various trading signal present in the traded asset's chart to avoid severe losses and maximize profit.

It can also be seen as the act/process of bringing into use many trading tools for the confirmation of trading signals present in the trading market.

Furthermore, confluence trading can simply be said to mean the ability of a trading to bring together numerous trading strategies, tools, ideas merging to be one complete trading strategy.

From the above said meaning of confluence, it would interest you to know that confluence in trading simply occurs when all this trading strategies, styles, ideas and methods used gives the same trading signal.

Also, confluence can simply be said to be as a result of the implementation of numerous technical indicators which at the end comes up with the perfect entry and exist points in trading and also help identify the reversal signals present int the chart price of the traded token.

Furthermore, it would interest you to know that the word confluence simply can into existence, from the Geographical point of view, where it is meant to mean a point where two rivers meet. Or can a point where several roads meet.

A detail understanding of how confluence works is an added advantage to a crypto trader, this would in turn enhance the success of trading for the trader.

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HOW A TRADE SETUP CAN BE ENHANCED BY USING CONFLUENCE TRADING

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From the definition of confluence trading as been the combination of multiple trading techniques making a good market strategy in order to confirm the trading signals present in a trading market, this therefore tells us that for a crypto trader to rely on one particular trading technique or strategy can lead to a faulty trading.

DECISION-MAKING:Hence, since the confluence trading is being utilized by traders to help make clearer decisions in terms of trading the market, I will therefore say that utilizing confluence trading into a trade market setup will help traders make clearer decisions regarding trading a crypto market. It is important to have well laid down decisions not through assumptions but facts, and trading using the confluence trading strategies will help boast quality decision-making.

AVOIDANCE OF MAXIMUM RISK AND CAPITALIZATION OF MAXIMUM PROFIT: The utilization of confluence trading in a crypto market by a trader is a big diversion from been caught of in false breakouts, which will in turn help the trader maximize profit. With the application of multiple trading strategies, there is high probability that the trader will be free from the fear of been caught up in barriers which may hinder the success of a trade. On the other hand, with the utilization of multiple trading strategies, It will in turn generate more profit for a trader. In a nutshell, a trade set up using confluence trading reduces risk outcomes and use the situation to maximize profit for the trader.

Considering the chart below, trading a crypto pair BTC/USD (U.S. Dollar). From observation, you will notice a bullish trend which later had a false breakout, relying on RSI signal which formed at the bottom of the chart would definitely lead to rash decision-making saying there was going to be a bearish trend afterwords but with the addition of another trading strategy the EXPONENTIAL MOVING AVERAGE later confirmed that their asset will simply continue in its bullish nature.

[Screenshot taken from trading view]

This been demonstrated, have been able to show how utilization of two or more trading strategy can help a trader make quality decision and maximize profit in return.

From the above demonstration and explanation in question 1 above, clearly shows that there are a lot of benefits in trading that confluence trading is being applied. Therefore, in this section, I will be talking about the importance of confluence trading in a crypto market.

From the chart demonstrated above, a clear image was sent which indicates that relying majorly on a single trading strategy to execute a trade with lesser risk involve simply shows that the probability of this trade been executed successfully is low. Therefore, it shows that relying on a single trading strategy is risky therefore, an alternative is in place which is the confluence trading and below is its importance.

• As early stated, I will say that confluence trading enhances Quality decision-making for a trader. With good decisions been made, this alone is a guarantee which contributes to the success of trading for a crypto trader.

• Confluence trading also enhances profit maximization for a trader and reduces the possibility of risk been involved in the trading market.

• confluence trading reduces the possibility of fear in a trader, which will in turn lead to successful trading with the right strategies in place.

• Furthermore, confluence trading helps eradicate and make clear all the false that may be present in a trade market.

• The utilization of confluence trading by a trader helps in the maintenance of good risk management with reduction in losses.

• Lastly but not the least, confluence trading also helps identifies good trading strategies a trader should make use of while trading and also help breach the gaps that other trading strategies might have.

It is important to know that the utilization of more numbers of trading strategies results in more successful trading. Hence, the higher the number of confluence, the more effective the trading becomes.

For the effectiveness of confluence trading, it is advisable for a trader to utilize two or more trading strategies as early said. This therefore results to what is known as 2-level Confirmation Confluence Trading and 3-Level Confirmation confluence Trading.

2-level Confirmation Confluence Trading:
As the name implies, this simply refers to the utilization of two trading strategies, tool, or techniques for the confirmation of a trade setup/signal confirmation.

[screenshot from tradingview]

It is the successful implementation of two different trading styles to make one effective trading technique which may enhance the success of the trade being performed. From the chart above, where we have 2-level confirmation setup for the BTC/USD token you will notice a bullish trend.

3-Level Confirmation Confluence Trading:
Similarly to the 2 level confirmation confluence trading, this simply signifies the utilization of 3 trading techniques or strategies for the accomplishment of a successful trading setup.

[Screenshot taken from tradingbiew]

This is shown in the chart above for a crypto pair of BTC/USD Which market price trends downward.

[screenshot from tradingview]

From the chart below where the BTC/USD crypto asset is been set up for trading you will notice we have a 2-level confirmation confluence trading for a bullish setup. This is been set up through the combination of RSI indicator and Exponential moving average were used to confirm the bullish setup. From the RSI indicator, it simply indicates a signals reversal in the present state of the trend (bullish). As a crypto trader, it is therefore not very advisable to only rely on the RSI indicator/trading tool for the confirm of trend reversal present in the traded crypto market.

Therefore, Confirming this trend reversal will proof very effective by using another trading tool which will help filter out fake outs/false breakouts/reversal signals from the RSI. Hence, the EMA is simply initiated to confirm the trend reversal. From the chart above, we can identify that the price was still trading above the EMA after the RSI signal. This implies that the trend deterioration might be a fake as the price/rate can remain in an overbought province in a strong trending market.

Furthermore, in confirming the trend reversal signal present from the RSI indicator, the price of the traded asset will price break below the EMA line. This will therefore indicate good confirmation on the reversal signal which will in turn enhance good decision making for the trader.

[Screenshot taken from tradingbiew]

As discussed above, the information of a trade signal using 3-level confirmation encompasses using a convergence from at least 3 trading methods to substantiate a trade setup. As done in the first part the same token will therefore still be in use to clarify 3-level confirmation confluence trading. The 3-level confirmation gives greater precision and advantage over a trade structure/design.

Taking a close look at the chart above, it is obvious that there is a presence of at least 3 confluence to affirm the sell signal. Were we have the RSI present, a break of market structure, and also a break below the Exponential moving average. All these techniques are motioning a bearish reversal and this is a strong evidence which enhances a sell position on the traded crypto asset BTC/USD.

The lesson so far entails in it what confluence trading is all about along with the advantages of confluence trading. In a nutshell it is important to know that the application of confluence trading in the trading of a crypto asset is very important and have proven to ne more effective.

All thanks to prof.@reminiscence01for this wonderful lecture so far, i say it was very productive and educative along side. I hope this homework post meets the required standard of this homework task.

Thanks for reading guys.
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