Someone told you to wait for confluence. So you did. Now you wait for six things to line up, and you take two trades a month.
That's a common place to end up, and it starts with a word that sounds more technical than it is.
What does confluence mean?
A confluence is one thing you check before you take a trade.
"Price is at a level I marked yesterday." "The bigger chart is moving up." "A strong candle just closed in my direction." Each of those is one. When several are true at the same moment, traders say the trade has confluence.
The word comes from rivers: a confluence is the spot where two rivers meet. In trading, it's where several of your reasons meet. That's all it is. There is no official list, and no fixed number that makes a trade good enough.
What do confluences look like in different styles?
Every style of trading has its own. A few examples:
- Price action (reading the bare chart, without extra lines): a level you marked earlier, plus a candle pattern at that level.
- Indicators: a moving-average cross, plus the bigger chart pointing the same way. A moving average is a line that follows the average price of recent candles. Traders often draw a fast one and a slow one. A cross is the moment the fast line moves above or below the slow line.
- Smart money concepts (SMC): a sweep of the lows, plus a break of structure. A sweep is price briefly pushing through a level where many traders keep their stops, then coming back. A break of structure is price moving past its last clear high or low.
- Timing: the London or New York session (the hours when that market is busiest), plus no big news in the next hour.
None of these is better than the others. What they share is that each one is a yes-or-no question you can answer before you get in. That makes each one a box you could tick.
Why write them down instead of keeping them in your head?
Because once they're written down, you can count.
Say you've logged forty trades, and on each one you noted whether price was at your level. Now you can look at the trades where it was and see how they did. Then look at the trades where it wasn't. You can do the same for each thing you check.
In your head, that never happens. You remember that "trend plus level" works, because you remember the times it did. On paper, you see all the times, including the ones you'd rather forget.
Does every confluence help?
No. This is the part most people skip.
Some of the things you check really do make a difference to your results. Others are just there. They show up on your winners and your losers about equally, so all they add is another reason to wait.
Some can't tell you anything because they're always ticked. If you only ever trade with the trend, "the bigger chart is trending" is true on every trade you take. It can't separate your good trades from your bad ones, because it's never missing.
And some say the same thing twice. A moving average that points up and a bigger chart that's moving up are often the same fact. Ticking both doesn't make the trade any better. Do more confluences mean a higher win rate? looks at that trap in more detail.
Nobody can tell you in advance which of yours matter. Not a course, and not a video. It depends on your market and on how you trade it. The only way to find out is to count over many of your own trades.
Why is a short list better than a long one?
Every extra thing you require cuts your number of trades.
Ask for two things to line up and you might see the setup most days. Ask for six and you might wait weeks.
Fewer trades means slower answers. You learn very little from a couple of trades a month, and a small number of trades can look great or awful by luck alone. What a trading edge is explains why you need many trades before a result means much.
A long list has a quieter cost too. When six things have to line up, you start bending the definitions to get into a trade. The level was "close enough", the candle "sort of" closed strong. At that point the list has stopped meaning anything.
So there is no magic number. Three things you check the same way every time will teach you more than six you bend.
How do you start?
Pick three to five things you actually look at before every trade, whether or not a course told you to.
Give each one a short name, and use the same name every time. "At my level" is a name. "Good area" is not, because next month you won't know what you meant.
Then, on every trade from now on, note which of them were there. Yes or no, for each. Next to that, write down the result in R. R is your result in units of risk: +2R means you made twice what you risked.
After a few months you'll have the start of an answer. You'll see which of the things you check turn up on your good trades, and which turn up on everything.
If those months only gave you fifteen trades, it's not an answer yet. Keep going until the trades are there. What to track in a trading journal covers the other fields worth logging next to those names.
Questions people ask next
How many confluences do I need before I take a trade?
There is no right number. Most traders do well with a short list of two to four things they check the same way every time. More than that usually means fewer trades and slower answers, without better results.
What are the best confluences?
Nobody can name them for you. The best ones are the ones that show up on your winning trades more than on your losing trades, in your market, the way you trade it. You only see that by counting your own trades.
Is a confluence the same as a setup?
Not quite. A setup is the whole picture you wait for. A confluence is one piece of it. A setup is usually a few confluences that have to be true together.
Can too many confluences hurt?
Yes. Each extra one cuts the number of trades you take, and some of them say the same thing twice. You end up waiting longer for trades that aren't any better.
In EdgeFlow the names you choose become boxes you tick on each trade. Edge Builder counts which combination of them did the work in your own trades, with the number of trades behind every answer, and says when it's too early to tell.