Hearing high Probability Trading would be so mouth watering you'll feel like you've hit a jackpot or maybe it isn't.
But firstly what do you understand by high probability trading and what does it involve? Are there any forex trading strategies of high probability?
Let's start with what high probability Trading really means.
Here is the basic definition of high probability trading:
It means trading only when there’s a very high likelihood of your trade being a winner. Just like the normal definition of probability
Frankly speaking it's impossible for anyone to tell you what percentage of trading success rate would count as high probability trading.
So let's say someone has a 95 + % trading success rates that would be really good trading system to have. But that fact is it's very rare.
So if you want to consider a Trading success rate of high Probability it would be between 60-80%.
As you can see this is more than 50% chance of success.
Let us take a quick look at these:
I strongly believe that these two things below forms high probability trading setups:
- How much support and resistance there is
- The large time frames like weekly and monthly.
When we talk of support and resistance levels, these levels stand out. Every single trader in the world can see it.
The big financial institutions that trade the forex market can also see it. So the natural human response kicks in and prices behave predictably when it hits levels of support or resistance.
Another thing is that support and resistance levels you see on smaller time frames are not as important as those seen on the larger time frames.
HOW TO TRADE HIGH PROBABILITY TRADING SETUPS ON LARGER TIME FRAMES
It was stated previously that trading setups that happen in the larger timeframes take a lot of time to form. Some can even take years
So if you are focused on only trading one or 2 currency pairs, you’d hardly get any trades at all.
But the silver lining is that there are 20-23 currency pairs that you can monitor to see where price is at in comparison to those support and resistance levels you’ve identified on your charts. With that, the chances of trade setups forming frequently in any of these 20 plus currency pairs increases, but regardless, it’s still going to be a long wait.
There will always be times when the price will move around a bit on those identified levels of support and resistance and this may mean you may get hindered on your first trade attempt but you will notice that after that price will continue in the direction you anticipated.
So if reach a barrier once, don’t think it’s over. Keep watching keep observing. You may have to take another second trade or even a 3rd trade before the price moves in the most appealing direction.
The content of this article reflects the author’s opinion and does not necessarily reflect the official position of LiteForex. The material published on this page is provided for informational purposes only and should not be considered as the provision of investment advice for the purposes of Directive 2004/39/EC.