Not all everyone who trades in the foreign exchange market would get to experience gains. In fact, a large number of those who enter the forex market eventually end up losing their trading capital and are soon forced out of the market after they make their first trade. Wise traders, on the other hand, can increase their chances of staying in the forex market by using high probability trading techniques. This strategy involves making sure that all conditions and price action indicators are on-target before entering or exiting a trading position. The result of this spot-on forex trading strategy is as close to the forex trader’s expected results as possible. When done correctly, therefore, using a high probability trading technique lets you make profitable trades all the time.
High probability trading is a strategy wherein forex traders would wait for price action charts and technical indicators to show that the odds are in their favor before they take a position. Reliable data, keen eyes, technical analysis know-how, and a whole lot of patience would be necessary in order to get into high probability trading. In contrast with day trading activities, high profitability trades are not done with haste and in quantities. Forex traders using this strategy also often trade few and far in between – they are, as other traders would say, out of the market more than they are in the market. High probability forex traders, however, prefer to view being out of the market as a strategic position where they would be able to preserve their capital until such time when the conditions are ripe for growing their capital.
Forex traders engaged in high probability trading do not only rely on one specific indicator to move on their trades. Aside from watching price action setups, it also takes a confluence of indicators to indicate whether a trade is going to be profitable or not. There is no way to guarantee gains in the forex market, but when all the indicators are interpreted correctly and are supported by market conditions, the probability of a favorable trade is often without fail. Yet, forex trading experts would be in agreement that not all strong and well-defined price setups are, in fact, foolproof. High probability traders would still have to exercise sound money management instead of throwing all their money into the trade.
The keys to high probability trades would be patience and accuracy. You have to be willing to stay in the sidelines and wait for the right time to make your trades. Being in this position, however, does not mean that you should sit idly – you actually have to do the work while you are waiting for the right time. Watch the market and analyze price movements based on your preferred charting tools. Know which price action setups you are looking for and understand how the market is moving. Keep your trading plan in mind and be ready to act come the right time.
High probability traders are obviously cautious about their trades, willing to keep their trading capital stagnant until they can be assured of better chances at locking in their gains. Understand that forex trading is all about taking risks and learning how to manage these risks for better profitability. Forex traders who are a bit risk averse can turn to high probability trading as a long term strategy.