The Power of “Confluence”
You’ve heard the phrase so many times it sounds cliché.
“High probability trades.”
I hate to even say it.
The truth is… “high probability” is meaningless for new traders.
Selling credit spreads 10 miles out of the money is high probability.
You’ll make money 19 times out of 20.
But your first loss will wipe out a year of steady winners.
A high probability of success is not enough.
Only when coupled with favorable risk/reward numbers will “high probability” do you any good.
But there’s a secret…
A secret that traders often learn $20,000 too late.
And today I’m going to share it with you.
That secret… is “confluence.”
Confluence is a junction – a coming together of several things.
For traders, these things are indicators, chart patterns and fundamentals.
The more that line up, the higher the probability of a trade’s success.
The specific tools will vary from trader to trader, but waiting for confluence is a universal tactic.
And any trader worth his salt will tell you the same.
I’m going to share with you 3 of my favorites. Each is very simple.
But when these indicators converge, all pointing in the same direction – I know I have a high probability trade setup.
And because of the counter-trend indicators I’ve chosen, the potential profit is always greater than the risk for the trade.
This is a daily chart of the NZD/USD forex pair.