Mar 18
Author : Dave Lex
It has that out of all the traders in the world, only 5% of the traders in the world actually make money in the financial markets Why is this so and what are they doing that makes them different from all other traders out there? Is it because they are born as a trading genius? Is it because they are just lucky every time? The answer is because they put odds in their favor Meaning to say - Every trade that they take, they ensure that there is a higher probability to succeed than to fail, and that constitutes to a high probability trading system which they have developed The following points are some of the methods top traders employ to make sure that every trade they put on is in their favor:-
Use multiple time frames
By using multiple time frames, you are able to see a clearer picture of what is going on For example, if you trade intraday and use the 5 minutes time frame to enter your trades, it would be good to look at a higher time frame like 30 minutes or 1 hour time frame to see whether the market is generally headed So if on the 1 hour and 30 minutes time frame price is in an upward trend, then you would have a greater chance of success in your long trades than short trades Therefore to put the odds in your favor, you would only take long trades and sit on your hands until you see an opportunity for a long setup
Trade with the trend
You have probably heard this golden saying of "The trend is your friend, all the way till the end" And this saying holds true as many fund companies and big name traders such as Richard Denis his turtle traders employ the tactic of trend trading True trend trading has no profit target They basically just ride the trend all the way till the trend tells them to get out This way, even with 30% winning trades, they are able to reap massive fortune for their winners a way bigger than their losers
Cut your losses
This is one of the most important and key vital strategy in your trading plan This is because if you let your losses run, 1 huge loss could wipe out all your entire winnings and could even put you in the red zone Therefore it is very crucial that you determine how much you will risk for every single trade and put a stop loss in place If you do this, you will not be worried that your account will be wiped out as your stop will get you out at your specified price Occasionally there will be slippages on your stops due to gaps or illiquidity This is a normal part of trading and you should also anticipate and incorporate slippage into your trading plan Another important point to note is not to move your stop loss further away from where you enter your trade It is perfectly fine to trail your stops to capture profits but not move your stop away I've seen many traders over the years that always do that and end up blowing their accounts over and over again and still ask me why they keep blowing their accounts So once you got your stop loss in place, keep it There will be losses in trading and its inevitable Move on to the next trade and concentrate on that one instead One last key phrase that I keep in mind while trading that has helped me immensely over the years is - "Live to fight another day"
I hope this article has helped you in your trading If you were to follow these 3 tips I have mentioned above, without a doubt, you will experience improvement in your trading and you will be on your way to build a high probability trading system I wish you good trading!
Dave Lex is a full-time trader and trades the forex and the US stock and options market. He also constantly test and develop trading systems to share with the public. For more information on how you can get one of his high probability trading systems for free, go to http://ProvenTradingSystems.com
It has that out of all the traders in the world, only 5% of the traders in the world actually make money in the financial markets Why is this so and what are they doing that makes them different from all other traders out there? Is it because they are born as a trading genius? Is it because they are just lucky every time? The answer is because they put odds in their favor Meaning to say - Every trade that they take, they ensure that there is a higher probability to succeed than to fail, and that constitutes to a high probability trading system which they have developed The following points are some of the methods top traders employ to make sure that every trade they put on is in their favor:-
Use multiple time frames
By using multiple time frames, you are able to see a clearer picture of what is going on For example, if you trade intraday and use the 5 minutes time frame to enter your trades, it would be good to look at a higher time frame like 30 minutes or 1 hour time frame to see whether the market is generally headed So if on the 1 hour and 30 minutes time frame price is in an upward trend, then you would have a greater chance of success in your long trades than short trades Therefore to put the odds in your favor, you would only take long trades and sit on your hands until you see an opportunity for a long setup
Trade with the trend
You have probably heard this golden saying of "The trend is your friend, all the way till the end" And this saying holds true as many fund companies and big name traders such as Richard Denis his turtle traders employ the tactic of trend trading True trend trading has no profit target They basically just ride the trend all the way till the trend tells them to get out This way, even with 30% winning trades, they are able to reap massive fortune for their winners a way bigger than their losers
Cut your losses
This is one of the most important and key vital strategy in your trading plan This is because if you let your losses run, 1 huge loss could wipe out all your entire winnings and could even put you in the red zone Therefore it is very crucial that you determine how much you will risk for every single trade and put a stop loss in place If you do this, you will not be worried that your account will be wiped out as your stop will get you out at your specified price Occasionally there will be slippages on your stops due to gaps or illiquidity This is a normal part of trading and you should also anticipate and incorporate slippage into your trading plan Another important point to note is not to move your stop loss further away from where you enter your trade It is perfectly fine to trail your stops to capture profits but not move your stop away I've seen many traders over the years that always do that and end up blowing their accounts over and over again and still ask me why they keep blowing their accounts So once you got your stop loss in place, keep it There will be losses in trading and its inevitable Move on to the next trade and concentrate on that one instead One last key phrase that I keep in mind while trading that has helped me immensely over the years is - "Live to fight another day"
I hope this article has helped you in your trading If you were to follow these 3 tips I have mentioned above, without a doubt, you will experience improvement in your trading and you will be on your way to build a high probability trading system I wish you good trading!
Dave Lex is a full-time trader and trades the forex and the US stock and options market. He also constantly test and develop trading systems to share with the public. For more information on how you can get one of his high probability trading systems for free, go to http://ProvenTradingSystems.com
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