One of the most key questions a trader should ask themselves before taking on the world of Trading, is what is High Probability Trading? This is probably one of the most important questions anyone can ask themselves. Not only does asking the question help a trader look at themselves more deeply, but it also helps a trader assess what they may possibly be doing wrong in their trading.
In this video post, I will go through the meaning of this topic in detail and also go over how a high probability trader should be looking at the market overall. Aspects covered in the video include looking at risk to reward which is a very important topic, looking at major confluences that actually effect the overall market and also deeper look at how all these components come together.
In a way, a deeper look into what it means to tackle the process of High Probability Trading as a trader and what sort of skill process a trader should be looking at in order to improve their overall probability.
Above Video – What Is High Probability Forex Trading and Why it is such an Important Topic for all Traders?
What Makes Up High Probability Trading?
Like mentioned in good Trading Strategies ( Forex Training ) such as The Engulfing Trader Series or The 5 Day Trend Training Series ( two examples ), there are a number of key components that put all these methodologies into consistency. Those methodologies in Trading include such aspects as:
- Major Structure
- Chart Trend
- Assessing Better potential Reward than Risk
- Lining up Confluences
- Price Action
- Positive Expectancy and Discipline
- Understanding where counter trend traders place their stop losses around midway trend structures or lower grade patterns with little confluence.
Each key component working along side each other developing the right mindset and frame work that goes along with any form of good trading.
- Keeping it Simple and Focusing on what is proven to work in Trading ( like the above 7 points )
- Avoiding fundamental belief systems that go against the Technical Trend, if aligning with existing trend and technical’s that is fine however avoid trading against the trend based on some Fed Release expectation or NFP prediction. These are gambling tactics and are not a base in High Probability Trading unless of course that evidence aligns with the Technical Trend or Price action of a pair. In that case positive fundamentals can be good in a uptrend, however positive fundamentals are not effective in a downtrend. For those wondering about this topic on fundamentals and their effectiveness against technicals then I want to let you all know that I have personally tested this aspect extensively multiple times on multiple pairs.
- Avoid making trade decisions alone based off indicators like Stochastic, MACD, RSI ( all oscillators ), volume ( does not exist in Forex ) or any other form of lagging indicator. The reason being is they follow price and so indicate what the price has done after the fact. Instead focus on more clearer Price Action which is current.
Overall, like mentioned in the Video Above, it is the key consistency of many elements combined together that makes up High Probability Trading, plus the key Understanding of Risk to Reward that puts it all together into a nice bundle of what we can use as traders to effectively take consistently profitable trades.