• Home
  • Live FX Chart
  • Best MT4 EA
    • Tiger X Pro MT4 EA
    • Lion King Indicator
    • Dream Trading Indicator
    • Penguin Martingale EA Premium
    • Panda Averaging EA Premium
  • Free Download
    • Tiger X Demo Free Download
    • Amazon Free MT4 EA
    • Bollinger Bands Free MT4 EA
    • EURJPY Free MT4 EA
    • Hit And Run Free MT4 EA
    • Power Scalping Free MT4 EA
    • Real Price Action Free MT4 EA
    • Trading King Free MT4 EA
    • Free Windows VPS Hosting
  • Blog
    • Forex Trading Tips
    • Forex Education
    • Forex Trading Strategy
    • Forex Broker Review
    • Become a Billionaire
    • Ultimate Forex Trading Guide
    • Free Expert Advisor
  • Secret
    • Secrets of Successful Trading
    • Few Words About Forex Trading
    • FREQUENTLY ASKED QUESTIONS
  • Shop
    • Tiger X Pro MT4 EA
    • Lion king Indicator
  • Help
    • Contact US
    • Advertise
    • YouTube Channel
    • Guest Post
    • Become A Reseller
    • Sale Forex EA & Indicator
BEST MT4 EA – Download Free Expert Advisor and Trading Robot for Metatrader. BEST MT4 EA – Download Free Expert Advisor and Trading Robot for Metatrader. BEST MT4 EA – Download Free Expert Advisor and Trading Robot for Metatrader.
  • Home
  • Live FX Chart
  • Best MT4 EA
    • Tiger X Pro MT4 EA
    • Lion King Indicator
    • Dream Trading Indicator
    • Penguin Martingale EA Premium
    • Panda Averaging EA Premium
  • Free Download
    • Tiger X Demo Free Download
    • Amazon Free MT4 EA
    • Bollinger Bands Free MT4 EA
    • EURJPY Free MT4 EA
    • Hit And Run Free MT4 EA
    • Power Scalping Free MT4 EA
    • Real Price Action Free MT4 EA
    • Trading King Free MT4 EA
    • Free Windows VPS Hosting
  • Blog
    • Forex Trading Tips
    • Forex Education
    • Forex Trading Strategy
    • Forex Broker Review
    • Become a Billionaire
    • Ultimate Forex Trading Guide
    • Free Expert Advisor
  • Secret
    • Secrets of Successful Trading
    • Few Words About Forex Trading
    • FREQUENTLY ASKED QUESTIONS
  • Shop
    • Tiger X Pro MT4 EA
    • Lion king Indicator
  • Help
    • Contact US
    • Advertise
    • YouTube Channel
    • Guest Post
    • Become A Reseller
    • Sale Forex EA & Indicator

Share This Post

Forex Trading Strategy

High Probability Trading Strategy

By Trade Expert on February 3, 2019 3395 views

Do you want to find high probability trading setups?

I’m sure you do, right? (Or you won’t be reading this right now)

But the thing is…

…you’re not sure how.

Instead of looking at price, you’re looking at indicators (without understanding the purpose of it).

Instead of following trends, you’re trying to predict market reversals.

Instead of proper risk management, you put on a huge bet because this trade “feels good”.

Now…

If you’re doing any of the above, then it will be difficult to identify high probability trading setups.

But don’t worry.

I’ve got good news for you.

Because in this post, I’ll teach you step-by-step on how to find high probability trading setups.

The trend gives you the biggest bang for your buck

The definition of the trend is this…

Uptrend – consists of higher highs and lows

Downtrend – consists of lower highs and lows

If you want to know where’s the path of least resistance, look left (and follow the trend).

When the price is in an uptrend, you should stay long. When the price is in a downtrend, you should stay short.

By trading with the trend, you can see that the impulse move (green) goes much more in your favor, compared to the corrective move (red).

Here are a couple of examples…

Now you’re probably wondering:

Rayner, identifying a trend looks easy. But how do I enter an existing trend?

And this is what we’re covering next…

Trade in the direction of the general market. If it’s rising you should be long, if it’s falling you should be short. – Jesse Livermore

How to identify areas of value on your chart

You’d probably heard of the saying, “buy low sell high”.

But the question nobody asks is…

…what’s low and what’s high, right?

This is where Support & Resistance comes into the picture.

Support & Resistance

And this is the definition of it:

Support – an area with potential buying pressure to push price higher (area of value in an uptrend)

Resistance – an area with potential selling pressure to push price lower (area of value in a downtrend)

Here’s what I mean…

Dynamic Support & Resistance What you’ve seen earlier is what I call, classical Support & Resistance (horizontal lines)

Alternatively, it can come in the form of moving average. This is known as dynamic Support & Resistance (and I use the 20 & 50 EMA).

This is what I mean…

Not only does support & resistance allows you to trade from an area of value, it improves your risk to reward and winning rate as well.

Now, another “trick” you can use is to use overbought/oversold indicators.

High probability trading — using Stochastic to identify areas of value

A big mistake most traders make is, going short just because the price is overbought, or oversold.

Because in a strong trending market, the market can be overbought/oversold for a sustained period of time (and if you’re trading without stops, you risk losing your entire account).

MUST READ:  Trend Following Trading Strategy

Here’s what I mean:

Now you’re wondering:

How do I use Stochastic to identify areas of value?

Here’s the secret…

Are you ready?

In an uptrend, you only look for longs, when the price is oversold.

In a downtrend, you only look for shorts, when the price is overbought.

Here’re some examples:

If you follow this simple rule, you can “predict” when a pullback will usually end.

So, you’ve learned how to identify areas of value on your chart.

Now…

…you’ll learn how to better time your entries.

How to enter your trades

There’re 3 ways you can enter a trade:

  1. Pullback
  2. Breakout
  3. Failure test

Pullback

A pullback is when price temporarily moves against the underlying trend.

In an uptrend, a pullback would be a move a lower.

Here’s an example:


And…

In a downtrend, a pullback would be a move higher.

An example:

According to the work’s of Adam Grimes, trading pullbacks has a statistical edge in the markets as proven here.

You may wonder:

What are the pros and cons of trading pullbacks?

Advantages of trading pullbacks:

  • You get a good trade location as you’re buying into an area of value. This gives you a better risk to reward profile.

Disadvantages of trading pullbacks:

  • You may potentially miss a move if the price doesn’t come into your identified area.
  • You’ll be trading against the underlying momentum.

Breakout

A breakout is when price moves outside of a defined boundary.

The boundary can be defined using classical support & resistance.

Breakout to the upside:

Breakout to the downside:


You’re wondering:

What are the pros and cons of trading breakouts?

Advantages of trading breakouts:

  • You will always capture the move.
  • You are trading with the underlying momentum.

Disadvantages of trading breakouts:

  • You get a poor trade location as you’re paying a premium.
  • You may encounter a lot of false breakouts.

Failure test

This technique possibly originated from Victor Sperandeo, and the works of Adam Grimes shows that it has a statistical edge in the markets.

It works like this…

You’re entering your trade when the price does a false breakout of Support/Resistance. Thus taking advantage of traders who are trapped from trading the breakout.

This entry can be applied in a trending or range market.

Here’re a few examples…

Failure test at (BCO/USD):

Failure test at (USD/SGD):

Failure test at (EUR/USD):

Now, the next thing you’re going to learn is…

How to set your stop loss

Place your stops at a point that, if reached, will reasonably indicate that the trade is wrong, not at a point determined by the maximum dollar amount you are willing to lose. – Bruce Kovner

I’m going to share with you 3 ways to do it:

  1. Volatility stop
  2. Time stop
  3. Structure stop
MUST READ:  The Price Action Forex Trading Strategy

Volatility stop

A volatility stop takes into account the volatility of the market.

An indicator that measure volatility is the Average True Range (ATR), which can help set your stop loss.

You need to identify the current ATR value and multiply it by a factor of your choice. 2ATR, 3ATR, 4ATR etc.

In the example above, the ATR is 71 pips.

So if you were to place a stop loss of 2ATR, take 2*71 = 142 pips

Your stop loss is 142 pips from your entry.

Pros:

  • Your stop loss is based on the volatility of the market
  • An objective way to define how much “buffer” you need from your entry

Cons:

  • It’s a lagging indicator because it is based on past prices

Time stop

A time stop determines when you exit your trades based on time.

Instead of exiting your trades based on price, you exit your trades after X amount of time has passed.

You need to define how much time you will allow before exiting it.

An example:

You took a short trade at resistance area. But after 5 days it’s not going anywhere, so you exit your trade.

Pros:

  • You reduce losses
  • If you have trading records, you can identify the optimal amount of time to give your trades

Cons:

  • You may exit prematurely only to see price move in your favor

Structure stop

A structure stop takes into account the structure of the market and set your stop loss accordingly.

An example…

Support is an area where price may potentially trade higher from. In other words, it’s a “barrier” that prevents further price decline.

Thus, it makes sense to have your stop loss below Support. Vice versa for Resistance.

Here’s what I mean:


You want to place your stop loss where there is a structure in the market that can act as a “barrier” for you.

Pros:

  • You know exactly when you’re wrong because the market structure has broken
  • You’re using “barriers” in the market to prevent the price from hitting your stops

Cons:

  • You need wider stop loss if the structure of the market is large (this results in a smaller position size to keep your risk constant)

Now, let’s move on…

What is confluence and how it impacts your trading

Here’s the thing:

You’re not going to enter a long trade just because Stochastic is oversold, or the market is in an uptrend.

You’d need additional “supporting evidence” to give you the signal, to enter the trade. And this “supporting evidence” is known as, confluence.

Confluence is when two or more factors give the same trading signal. E.g. The market is in an uptrend, and price retraces to an area of support.

Here’re two guidelines for you:

1. Not more than four confluence factors

The more confluence you have, the higher the probability of your trade working out. But…

MUST READ:  5 Types of Forex Trading Strategies That Work

In the real world, your trading strategy should have anywhere between 2 – 4 confluence factors.

Anything more, chances are you’re going to get very little trading setups. And it’ll take you forever before your edge can play out.

You can take mediocre trading setups, and still make money in the long run.

2. Do not have more than one confluence factor in the same category

If you’re going to use indicators (oscillators) to identify overbought/oversold areas, then use that only.

Don’t add Stochastic, RSI and CCI because it’ll leave you with analysis paralysis. Similarly…

…adding simple, exponential and weighted moving average on your charts, doesn’t make any sense.

If you’re still reading at the point, you’re in for a treat. Because here comes the exciting part…

A high probability trading strategy that lets you profit in bull & bear markets

And here’s my secret (which is what you’ve just learned)…

  • Trade with the trend
  • Trade at areas of value
  • Find an entry
  • Set my stop loss
  • Plan my exit

If a trade meets these 5 criteria, then its a good trade to me.

Now, let’s learn a new trading strategy, that gives you high probability trading setups.

Are you ready?

Here it goes…

If 200ma is pointing higher and the price is above it, then it’s an uptrend (trading with the trend).

If it’s an uptrend, then wait for the price to pullback to an area of support (trading at an area of value).

If price pullback to an area of support, then wait for failure test entry (my entry trigger).

If there’s failure test entry, then go long on next candle’s open (my entry trigger).

If a trade is entered, then place a stop loss below the low of the candle, and take profit at nearest swing high (my exit and profit target).

Vice versa for a downtrend

**Disclaimer: I will not be responsible for any profit or loss resulting from using this trading strategy. Past performance is not an indication of future performance. Please do your own due diligence before risking your hard earned money.

Here’re a few trading examples…

High probability setup at (USB05YUSD):

High probability setup at (USD/SGD):

High probability setup at (GBP/AUD):

Here’s the thing:

You may not be comfortable using my trading strategy because it may not suit you.

So, what you need to do is, “tweak” it into something that fits you. And this is what we’ll cover next…

I don’t think traders can follow rules for very long unless they reflect their own trading style. – Ed Seykota

So, what’s next?

You’ve just learned how to identify high probability trading setups, and how to develop your own high probability trading strategy.

When you trade it with risk management, discipline, and consistency, you’ll greatly increase the odds of becoming a consistently profitable trader.

Tags: Forex Trading Strategy

Trending Right Now!

  • J.D. Rockefeller: From oil baron to billionaire (7)
  • Carry Trade (0)
  • Hit And Run Free MT4 EA (2)
  • 7 best ways to handle Forex Trading Stress (3)
  • Who Trades Forex? (2)
apps for forex trading Best MT4 EA books for forex trading forex broker forex calendar forex chart forex demo account forex exchange forex factory forex investment forex investor forex leverage forex live forex market forex market hours forex news forex pips forex rates forex signal forex trader forex trading forex trading app forex trading books forex trading course forex trading for beginners forex trading how to forex trading learning forex trading platforms forex trading profit forex trading signal forex trading strategies forex trading tutorial Free Forex Trading Indicator Free Forex Trading Robot Free MT4 EA Free MT4 Indicator strategies for forex trading trading forex trading futures trading ideas trading in iphone trading jobs trading on forex trading options trading oriental tradingview

Share This Post

Trade Expert
BEST TRADING ROBOT TIGER X PRO MT4 EA. 700 Percent Profit. Buy Now & Start Making Real Pips.

Related Articles

  • 7 Real-Life Ways to Become a Billionaire
    February 1, 2019
  • Developing Your Own Trading Plan
    January 27, 2019
  • Important Chart Patterns
    January 25, 2019
  • From Broke to Billions: 5 Strategies These Billionaires Used to Get Rich
    February 1, 2019
  • Fibonacci Free MT4 EA
    September 15, 2019
  • Want to Become a Billionaire? Do These 6 Things Immediately.
    February 1, 2019
  • Fractals Free MT4 EA
    September 15, 2019
  • Secrets of Successful Trading
    September 14, 2019
  • Currency Correlations
    January 27, 2019

4 Comments

  1. Matterport Belgique October 4, 2019, 6:26 pm

    It is perfect time to make some plans for the future and it’s time to be happy.
    I’ve read this post and if I could I desire to suggest you some
    interesting things or tips. Perhaps you can write next articles referring
    to this article. I wish to read even more things about it!

    Log in to reply
  2. Carpet Cleaning Services San Diego CA October 1, 2019, 7:36 pm

    Having read this I thought it was really enlightening.
    I appreciate you finding the time and energy
    to put this content together. I once again find myself spending a significant amount of time both reading and commenting.
    But so what, it was still worthwhile!

    Log in to reply
  3. bracelet homme perle September 30, 2019, 4:44 am

    What’s up, this weekend is nice for me, as this moment i
    am reading this fantastic informative piece of writing
    here at my residence.

    Log in to reply
  4. agence web casablanca September 30, 2019, 4:33 am

    It’s really a nice and useful piece of info. I am satisfied that you shared this
    helpful information with us. Please keep us up to date like this.
    Thanks for sharing.

    Log in to reply

Leave a Reply Cancel Reply

You must be logged in to post a comment.

700% Profit Best MT4 EA

BestMT4ea.com | Download Free Expert Advisor and Forex Trading Robot for Metatrader. Enhance your Forex Trading with Best MT4 EA.

99% Accurate Best MT4 Indicator

BestMT4ea.com | Download Free Expert Advisor and Forex Trading Robot for Metatrader. Enhance your Forex Trading with Best MT4 EA.
BEST TRADING ROBOT TIGER X PRO MT4 EA https://bestmt4ea.com

Our mission is to provide top-quality and unique trading tools for the Metatrader terminal, without hype or false promises. If you like our free indicators and EAs, kindly consider buying a product to support our work.

700% Profit Best MT4 EA

BestMT4ea.com | Download Free Expert Advisor and Forex Trading Robot for Metatrader. Enhance your Forex Trading with Best MT4 EA.

99% Accurate Indicator

BestMT4ea.com | Download Free Expert Advisor and Forex Trading Robot for Metatrader. Enhance your Forex Trading with Best MT4 EA.

Download Free Robot

BestMT4ea.com | Download Free Expert Advisor and Forex Trading Robot for Metatrader. Enhance your Forex Trading with Best MT4 EA.
© Tiger Trading Corp | Privacy | Terms | Disclaimer | Sitemap
  • Home
  • Free Download
  • Blog
  • Contact
  • Tiger X Pro MT4 EA
  • Lion King Indicator