stocks investing confluence strategy

Stocks Investing Confluence Strategy

Let’s simplify this first confluence strategy. The xBratAlgo and then bring in a second behavioral strategy to help manage positions. Don’t forget to watch the video at the foot of this article to learn through 3 different examples of this stocks investing confluence strategy!

stocks investing confluence not coincidence 4

The first of my Stocks Investing Confluence Strategy Trading Indicators, the xBratAlgo, was launched 5 years before my book “Confluence Not Coincidence” was published. I simply had to wait for technology to advance enough to have my confluence strategies developed into algorithms. I wanted make it easier for readers to understand by visualization how confluence strategies work.

Stocks Investing Strategy Confluence Analogy

Imagine looking at river 10 miles away. It is very difficult to understand which direction it is flowing, never mind the strength of the directional flow. Then almost impossible to look downstream to understand when that directional flow is weakening or potentially changing direction.

Over my decades of experience there are 12 main contributors to direction and therefore directional flow when Stocks Investing. With this analogy let’s call them tributaries that feed the river. If you had X-ray and Radar goggles, you would be able to visualize each of the tributaries. See how they are feeding the river and see which ones were running dry, trickling or flowing with enough force to affect the rivers directional flow and strength.

Getting Some Rules for Stocks Investing with Confluence

Once we can ascertain how many tributaries are feeding the directional flow, we can learn what the minimum number is to ensure directional flow is sufficient enough to keep momentum going in the river. That minimum for me, through experience is 9. Until the number reaches 9, I class the body of water a stream. Once we get to 9 and above, we have a river. If we have 12 out 12 then we have a raging river that difficult to stop!

This how I grade signals with the xBrat Algo:

9/12 is a 3* Signal

10/12 is a 4* Signal

11/12 is a 5* Signal

12/12 is a 6* Signal

Now a 6* signal maybe further downstream but momentum has gathered as 9,10 and 11 tributaries have increased directional flow, so its a strong signal! Getting in the river at 3* or 4* could get you in for a longer ride for sure, but there are hidden obstacles in the river that could slow directional flow. Whereas waiting for 5* and 6* would most likely mean that any normal obstacles will be broken through.

Confirmation and Trade Management

Before I show some real stocks investing examples in the video below. I want to briefly mention that rivers sometimes have sharp bends, rockslides and even man-made dams. These can slow directional flow or in some cases even change the direction of the river. This is where the second of my confluence indicators is helpful and this time it looks and confluence of behavior with volume and price action. This is called the xBrat Manager for obvious reasons. And then in the video below, showing 3 different stocks investing examples with this confluence strategy I mention the power of confirmation of the xBratAlgo signals with the use of the xBrat BIAS Depth Heatmap.

This, too, looks at the confluences of the BIAS on 6 different timeframes to confirm the direction flow signal. Confirming the xBratAlgo has enough “Juice” to make a considerable move. Check out the xBratAlgo Confluence LITE Bundle for the ThinkorSwim, MotiveWave, MT4, NinjaTrader and TradingView Platforms HERE

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