How Many Reasons Do You Have….?
Is there such a thing as ‘High Probability of Success’ trading? As a trader, if you are sufficiently capitalised, employ robust Risk & Money Management and can manage the uncertainty of trading the Hard Right Edge of the charts by having a structured approach, you don’t need to be right all the time. In fact you can make decent money by only being right 50% of the time. But as a trader you never stop learning and are always trying to improve your ‘process’ of trading, with the aim of achieving better results. One way of improving your trading process, is to add an additional check into your pre-trade preps….
This article assumes that you as a trader, use Mutli-Time Frame Analysis (MTFA). This is looking at different time frame charts and noting what you see and marking up your charts accordingly and building a ‘Watch List’ of currency pairs or other financial instrument to keep and eye to see if you get a trade trigger and confirmation. When I look at the charts I ask myself:
What Has Price Done, What Is It Doing Now, What Could It Do Next and If or When Do I Want To Get Involved?
Then, if I see a Potential Trade Set Up, I ask myself the following question:
How Many Reasons Do I Have To Take This Trade?
If I see a confluence of things taking place at one point in time on the same or even better on differing time frames, then I like that a lot and will focus right in on that potential trade. The more reasons I can identify for a particular trade the better. Plus, because I am looking at different time frames, I can usually pin down the Context of that potential trade, and thus manage my expectations of expected profits/targets/time in the trade etc.
So let’s consider what could be multiple reasons to take a trade?
Price could be at a Weekly Support level or a 200sma (Dynamic Support) or even a key Fib Level. The Daily could be showing a reversal candle such as a Hammer or Pinbar and on the 4 hour the next day’s chart could show a nice pull back into the Daily pinbar plus price could have also have turned up with Divergence, then on the 1hr it makes a Bullish Harmonic Pattern that may even have Divergence inside it on the 1hr or 30/15 minute chart. You get the idea! This to me is a ‘High Probability of Success’ Trade because there are Multiple Reasons To Take The Trade.
You will only achieve this if you do your Pre-Trading Preps, remember the 6Ps!
Top Trading Tip: Before taking a trade, do your MTFA Prep and ask yourself How Many Reasons Are There To Take This Trade? Try and find trades which have multiple good reasons to take them, also note the reasons not to take the trade and weigh up the odds of success. Let me know if this makes a difference to your trading.
(If you need help with your trading then why not have a look at our Personal Mentorship Programme)