Section 25: Using Delta in confluence with Compass, Daybreak

Utilizing Delta in Conjunction with Compass and Daybreak

While Delta can certainly be employed independently, its true strength shines when combined with our other scripts, Compass and Daybreak. At dRisk, given that a significant portion of our team engages in day trading, we have adopted a strategy that seeks to enhance our trading decisions. Rather than relying solely on Delta for entry points, we actively seek out Compass or Daybreak BUY or SELL indicators when they align with a region of heightened sensitivity, commonly referred to as the Delta Zone. Why do we do this? It's because this approach introduces a level of confluence into our trades, effectively increasing the likelihood of a successful entry.

As shown in the image below, let's consider a scenario where Compass generates a downside signal. This signal, in isolation, already carries a strong probability of success. However, when this high-probability signal coincides with the Delta Zone, we can reasonably expect additional selling pressure due to the elevated sensitivity level. This, in turn, bolsters our confidence in the trade's potential for success. In essence, our goal is to consistently boost our probabilities in every trade we make and waiting for confluence is a proven way of doing it.

In the image below, we provide an illustrative example of the same phenomenon, but this time on the BUY side.

The Golden Arrow - The Ultimate Entry

Every now and then, the cosmos aligns to gift us with an extraordinarily high-probability trade opportunity. These rare moments occur when all our trading systems unanimously signal us to enter a trade in the same direction, simultaneously.

In the visual representation below, we proudly present one of these exceptional occurrences, affectionately known as the "Golden Arrow" within our dRisk team.

In the given example, take note that Compass has issued a compelling BUY signal, while simultaneously, TrendX has alerted us to oversold conditions. Remarkably, this oversold condition coincides with TrendX touching base at its Delta Zone, a zone renowned for its buy sensitivity. What does this conjunction signify? It signifies an exceptionally high-probability entry point. Remember, Compass, by itself, boasts a commendable accuracy rate. However, when we combine this accuracy with the identification of oversold conditions by TrendX and locate it within the domain of extreme buy sensitivity, as indicated by Delta, we create the ultimate recipe for a statistically high-probability entry. We do this by harnessing multiple layers of confluence, significantly elevating our probability of achieving a successful trade outcome.

As evident in the image below, the result aligns perfectly with our expectations: a winning entry.