Learn 4 Classic Trade Confirmations

19 thg 4, 2023

"Look for a confirmation!"
"Wait for a confirmation!"

When I was learning how to trade and when I was watching and reading different trading educators, these words naturally pissed me off. What the hell are you talking about? What confirmation?

It was a full-blown mystery...🤯

Then, once I started to mature in trading and trade full-time, I became an author on TradingView.
Posting my forecasts and trading setups, I frequently mentioned the confirmation.
And now the newbies that are reading me and learning from me are pissed off...🤬

That is so funny I guess.

But the truth is that the confirmation must become a fundamental part of your trading strategy. It is your key to successful trading.

What exactly is the confirmation?
It depends on many many different things, in this article I will discuss with you the 4 main types of confirmation and give you detailed examples.

1️⃣ - PRICE ACTION CONFIRMATION

That is actually what I prefer.
Analyzing different markets and searching for decent trading opportunities often times we find some peculiar instruments to watch.
Identifying the market trend and key levels we find the potential spots to trade from.
But do we just open the trade once the "ZONE" is spotted?
I wish it could be that simple...
Trading just the zone, without additional clues brings very negative figures. We definitely need something else.

Price action & candlestick patterns can be those clues.

Accurate reflection of the current local market sentiment makes the patterns a very reliable confirmation.
Dodji's, pin bars, double tops/bottoms ...
Proven by history, the skill of identification & reading the patterns will pay off quickly.
Being in some sense the language of the market, the patterns are the fundamental part of my trading strategy.


2️⃣ - FIBONACCI LEVELS

Fibonacci levels are a very popular technical tool. Being applied properly it helps the trader to confirm or, alternatively, disqualify the identified "ZONE".
With multiple different methods like confluence trading, fibs are applied in hedge funds and various banking institutions.

The main problem with the fibs, however, is complexity and a high degree of subjectivity. Meeting different traders and watching different posts on TradingView I noticed that all traders tend to have their own vision. There is no universal system to apply here, a proper fib.confirmation technique can be built only with long-lasting backtesting and practicing.

3️⃣ - FUNDAMENTAL NEWS

The figures in the economic calendar, news, tweets. Actual fundamental news can become your best confirmation tool.
However, the main obstacle right here is the promptness, validity and reliability of the data that you get.

The information shouldn't be delayed and it must be objectively true.
The search for such a source is by itself is a very time-consuming and labor-intensive business not even mentioning its potential costs.

And that is not all. Knowing how to make sense of that data, its proper perception, and understanding requires a solid economical and financial background and experience.

At the end of the day, becoming an expert in fundamental analysis , the trader can easily sort the trading zones and trade only the ones that are confirmed by a decent fundamental trigger.

4️⃣ - TECHNICAL INDICATORS

I believe all the traders apply some indicators. From a simple moving average to some complex composite algorithms, indicators play a very important role in trading.

Being 100% objective and providing up-to-date real numbers and figures, they are our allies in a battle against subjectivity.

For many traders, the various signals from indicators are considered to be accurate and reliable confirmations.
Many algotrading solutions are operating simply relying on such signals and being able to bring consistent profits proves the power of technical indicators.


What confirmation type should you rely on?🧐

I guess the main rule right here is that the confirmation must MAKE SENSE to you. You should feel the logic behind that. It must make you confident in your action, even in case of the occasional losses, it must keep you calm and humble.

Let me know in a comment section what confirmation do you prefer!

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Thank you for reading.

Let me know, traders, what do you want to learn in the next educational post?