✅E5 Trading Confluence
Confluence - what it is and why it's important
Overview
The E5 Trading indicator suite is called a "suite" for a reason, and the reason is that the tools and indicators are designed to work together to help you, the trader, find confluence.
What is Confluence?
Confluence is when multiple indicators support a common hypothesis: that the asset will go up in price [i.e., bullish, indicating a potential long position], go down in price [i.e., bearish, indicating a potential short position], remain in a range or low-volatility squeeze, or exhibit other market behaviors that may persuade you to:
Enter a position
Exit a position
Do nothing
Suppose multiple indicators tell you to do the same thing. In that case, you have confluence and a significantly higher probability of being profitable, as compared to entering trades based on a single trade signal.
When looking for confluence among multiple indicators, the indicators must be "non-correlated".
What are non-correlated indicators?
"Non-correlated" means that each indicator you use falls into a different trading indicator category to eliminate information redundancy. The major trading indicator categories with well-known example indicators and mapping to E5 Trading indicators include:
| Indicator Category | Example Indicators | E5 Trading Indicators |
|---|---|---|
Trend | Moving Averages, ADX | |
Volatility | Bollinger Bands, Keltner Channel | |
Momentum | RSI, MACD, Stochastic | |
Volume | Relative Volume, On Balance Volume | |
Chart Studies | Trend Lines, Chart Patterns, Candlestick Patterns, Support | Resistance, Fib Levels |
The E5 Trading indicators suite includes four [4] powerful non-correlated indicators based on proven trading techniques and rooted in technical analysis concepts that have withstood the test of time across many markets and that work on all timeframes.
These indicators generate numerous high-value trade signals; however, there is no single trade signal that works every time, on every asset, and on every timeframe. If such a capability existed, it would be the holy grail money printer, and there would be no market for technical analysis indicators.
This is why it is critically important that you understand the concept of confluence -- what it is, why it is important, and how to find it by using a combination of trade signals generated by the E5 Trading indicator suite.
In summary, confluence increases the probability of entering and exiting trades at the right time, increasing your trades' accuracy and precision. If you practice identifying confluence alongside good risk management practices [i.e., responsible position-sizing and use of stop-loss on every trade], your profitability has the potential to soar!
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