Podcast:

How to Identify High Probability Trade Setups

In this weekly video:

00:24 – Looking for trades that will work in your favour

01:03 – Most traders rely on an indicator

01:23 – You need to understand how to read the charts

02:12 – Putting multiple factors in your favour

04:05 – Look at the actual price of the currency and use round numbers

05:20 – Adding the daily strength and weakness

05:38 – Client makes +7% in 2 months trading the H4 charts

I'm gonna share with you some tips and ideas about looking for high-probability trade setups. So let's get into that right now.

Hi traders, Andrew Mitchem here, the owner of The Forex Trading Coach, and today is video and podcast number 218.

Looking for trades that will work in your favour

And I'm gonna be discussing with you, and sharing some tips and ideas of helping you to look for higher-probability trade setups. Trade setups that are gonna work in your favour far more often than they're not going to. You see, the problem is with a lot of traders, is they don't have a strategy, and they don't really understand the market.

And when I look around at different systems and different ideas that people tell me they're currently trading ... And by the way, they're not making money on, otherwise they wouldn't be coming to me ... And what they're doing, it kind of just doesn't add up to me.

Most traders rely on an indicator

Most people are relying on a indicator. They're looking for a line to cross over and another line on their charts. They're looking for a dot to appear on their charts or for a line to change colour, or all these type of things. And that really is not true technical trading.

You need to understand how to read the charts

You see, to understand trading properly, you have to understand the charts and look at the price. You have to understand what's happening in the market right now. And when you clutter your charts with too many lines and graphs and dots and stars, and all these things that people tend to, for whatever reason, think it's a really good idea to clutter their charts with ... What you end up doing is not being able to see what's actually happening in the price, and understanding what's happening.

Someone sent me a screenshot the other day and said, "Hey Andrew, can you give me some advice on my strategy." And I actually couldn't see the candle patterns underneath all this congestion of this big mess of spaghetti and lines and things on the chart. So it was horrible. And no wonder this person was confused, because there was just so much stuff going on.

Putting multiple factors in your favour

And I said to him, "Look. Strip that off, and start again." And it was something that I discussed on my webinar with my clients last night, and it was all about putting factors in your favour to give yourself a high-probability chance of success. But what is it about this trade setup right now? Even when you understand candle patterns and price analysis, you still need more than just that.

You see, I'm a big believer in candle patternss and candle shapes, and where they occur. But you can't just say every bullish engulfing in candles means that price is gonna reverse and start moving up. You cannot do that. Likewise, if you use ... Let's say Bollinger Bands. You can't say every time that the prices hit the upper Bollinger Band, it's now gonna start coming down again. Because it won't. It's like if you use divergence. Every time you see positive divergence, it doesn't mean to say the price is gonna suddenly reverse and start going up again, because it won't. You have to put a combination of different factors together.

And when I was sharing with my clients,