[Confluence Trading] - Crypto Academy / S5W6- Homework Post for @reminiscence01

Question 1

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Explain Confluence trading. Explain how a trade setup can be enhanced using confluence trading.

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The crypto trader or analyst is always advised to not to rely over a singal technique to make there trading decision even when they are up to 80% reliability but always advised to keep multiple tools and techniques under consideration with proper confirmations this helps not only to increase efficiency but also in improving ability of avoiding false signals with minimal losses. The process of combining multiple tools for signal confirmation is known as Confluence Trading. Since crypto market is volatile and very risky platform for investment where everyone wants to have accurate confirmation for there good investment which can be done through confluence trading.
The word "confluence" refers to the combination of two or more bodies hence the confluence trading is the combination of more techniques to make trading decisions. It can also be said that trading follows the strategy that more will be the techniques higher will be the efficiency.

Source

In the above BTCUSDT chart of 15 min scalping trading strategies, we can observe the advantages of confluence trading when we used two different indicators RSI and Bollinger Bands we were able to trap the false signal given by RSI in which the price was continuously moving down after an uptrend when price exceeds the 80 mark on RSI and in the overbought region, it falls as said but Bollinger Bands shows that the market regains its strength after a shortfall.

Question 2

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Explain the importance of confluence trading in the crypto market?

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As every crypto trader needs proper confirmation and want to increase their effeciency as well as avoid false signal for their investment. Confluence trading plays a very important and vital rol to provide all these plat form to crypto trader and analyst. Some of the role of confluence trading are listed below

identify good:

confluence trading help the user by identifying good trading setup through giving satisfied decision on which a user person c

Risk Management:

Another importance of confluence trading is that it help traders in minimization of their losses by maintaining good risk management in trading. This all happens due to more ways of setting stop loss and take profit order often comes with more confirmation of trade order in the market.

Trading Confidence:

Trading is a very heartbeat fastening situation for a trader which may cause a lack of confidence in him which can be settled by seeing multiple confluence at his area of interest. When a trader marks a trade setup and the price get towards the area of interest, with multiple confluence around that side, it boosts his confidence for investment in the market.

Trading with accuracy:

False signals are filtered by trading with two or more technical analysis tools and also enhance the accuracy. The use of more than one technical tool is essential as most technical analysis tools as such not advisable to be used alone for the financial market, which is volatile, particularly crypto trading.

Question 3

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Explain 2-level and 3-level confirmation confluence trading using any crypto chart.

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2 level confirmation:

2 level confirmation in confluence trading includes trade signal from two technical analysis tools to become the part of trade. these signal are independent of tool type you can use which best suits your trade so as per instruction we have used two indicators, first one is MA and second one is RSI. First of all, we have to go for bisignal so we point out the lowest point in the market we took it under consideration at initial observing point as we can see in the screenshot that there are two sides on the left hand side RSI is going downward as touching ground while on the right one RSI is at up trend which means the price will touch its peak so from here we have to take entry and place order since both are showing up trend so it will strengthen our prediction

3 level confirmation:

In the above steem USDT screenshot we can say that the 3 level confirmation In which first we have taken a starting point from we started our trading and we have to go toward a bullish trend or uptrend we have used two of them in which the first one is Magni indicator which is moving average convergence and divergence and the second one is MA (moving average). By using these two indicators we come to know by watching the chart that prices suffer the downfall. The two lines in the mid of the chart show the previous candles, the green line shows the prediction or the lowest point if red line cuts the green line it means the trade must have to suffer the downfall but if it breaks the height level of its starting point than it is the indication that it will bring some profit.
When we look after the Magni we come to know that the orange line is a continuous and permanent line and do not affect the trade but the blue line shows some deflection if it moves downward means it will bring bare trend and price will go down similarly if its moves upward it makes a profit. As we can watch in the screenshot the line color becomes light red from the dark one since it is the indication of an uptrend so obviously our price moves upward.

Question 4

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Analyze and Open a demo trade on two crypto asset pairs using confluence trading. The following are expected in this question.

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On the given chart shown above we use the strategy of 2nd level confirmation in which we use two indicators of MA and RSI since our coin is steem USD and the price of coin go down as much that it could touch the market ground and then it gradually appears to go upward when the coin is suffering downfall so the indicator RSI shows that the coin will touch oversold region and then appear to go upward which means that it is the prediction that it will make a profit so here we take our entry point at 0.4553 and then place our stop loss at 0.4528 due to which we have not to face as much loss, then we watch after 15 minutes that the price we're going upward at 0.4585 and we started taking 0.22 profit. This all known by the name of Bistrategy

Conclusion:

In this lesson, we have learned confluence trading is an important tool in cryptocurrency trading to hunting the good decision for the good investment in the crypto market. Through this tool, we can be able to get more accurate predictions and help traders in future trading.

CC

@reminiscence01