High Probability Trading

To become a successful trader in the foreign exchange market, you must understand what high probability trading is and how to use it. High probability trading are trades that have a low risk/reward ratio that have been backtested and approved to expect positive results.

The thing that you will learn or hopefully have already learned is that the best traders always try to make trades when the odds are in their favor, not just because the market is open and they can trade anytime. Any smart trader is obviously not going to make many trades when they feel like all odds are against them. So as a trader you want to know the odds are favoring you.

Trade With Purpose

You will always do your best trading when you have a purpose or reason for trading. It is much easier to find the high probability trades when you have a clear purpose, rather than just trading aimlessly. Most will trade for the purpose of making money and why not since that is the main reason they are in the market in the first place.

The majority of the time high probability trades are made only in the direction of a major trend. If the market is in an uptrend, a trader will wait for a dip and test that level before entering that market. Dips are just waves in a trend and are low-percentage trades, which should be avoided.

Also you will want to make sure that you limit the number of your trades or frequency of trades. When you are trading with a purpose, it is important to look for the best trade opportunities. Don't ever trade just for the purpose of trading. Make smart decisions and research each trade before making a decision. This is when you will make your most profitable trades.

Don't Trade With Uncertainty

Another method to use when trying to make high probability trades is to make sure you are not trading with uncertainty. High probability means that you are confident in the trades you are making. This takes studying the market and also analyzing the market in order to be confident in the trade you make.

Trading with uncertainty almost guarantees mistakes and that means it will cost you. When you have done your research and can make a clear decision, you are definitely making what most call a high probability trade. These are the trades that are going to take you places in the market and are going to make you into a successful forex trader.

Know When To Cut Your Loses

The high probability traders know how to best cut their losses and let their good trades run for them. Many bad traders however, let their good trades eventually turn into bad ones that cause them to come out losing money rather than taking their profits high and ending that current trade. It is important to know when and where to cut your losses and take your profits.

The last thing that we will say is that knowing when to exit your trades is really even more important than knowing when to enter a trade. Most traders will usually lose much more money on the trades that they should have exited rather than the ones they didn't enter.

So as you begin your trading, make sure that you learn to recognize the high probability trades and the trends that go along with them. Then after you have entered a trade, make sure that you pay close attention so that you can know when the right time to exit is.