A frequently asked question is, “What is a high probability trade?”
When you sit down for a good trading session, finding a trade setup isn’t that hard-but there are trading setups, and then there are high probability trading setups. In fact, in any given trading session you’ll only have a few setups with that coveted high probability quality that pays so handsomely!
So what are those qualities in a setup that make it high probability?
We’ve identified qualities of a high probability trade: (In order of importance)
1. Trend. Does the trend support the direction of the trade?
2. Momentum. Is momentum building or slowing?
3. Support and Resistance. Is the trigger above or below support?
4. Pattern. Is there a pattern to support the trade?
5. Volatility. Is there enough volatility to create a profit?
6. Time. Are you at the beginning of a time cycle?
7. Indicators. Does your favorite indicator support the setup?
Like a good attorney, you can use the qualities listed above to build a solid case for a high probability trade. If you don’t have everything aligned, then the probability of successful trade drops. If your trading setup has these qualities in perfect alignment, then there’s a high probability the trade will work to your favor.