And the inverse head and shoulders pattern appears at the end of a downtrend. There are three primary components within a head and shoulders pattern. This includes the left shoulder, which is an important swing high, followed by the head, which is highest peak within the pattern, and finally the right shoulder which is an important swing high that follows the head formation. Below you can see an illustration of the head and shoulders pattern. The neckline holds a special significance within the structure.

Essentially the neckline is drawn connecting the two troughs within the larger structure. The neckline can be a straight line, or slanted slightly upward or downward. It serves as the signal point for the head and shoulders pattern. More specifically, a sell signal would be triggered when the price breaches the lower neckline. Flag Pattern — The flag chart pattern is a continuation type pattern that is often seen following a sharp price move up or down. It resembles a zigzag or lightning bolt formation.

It is a consolidation phase wherein the price action is contained within a parallel price channel. The upshot of the flag pattern is that once this consolidation formation ends, it will result in another price leg in the direction of the prior trend.

There are several different ways to execute a high probability trade using the flag formation. One could wait for a breakout of the resistance trendline in the case of an uptrend, or a breakout of the support trendline in the case of a downtrend.

Alternatively, some traders prefer to use the Fibonacci retracement as their preferred high probability entry technique. Below you can see an illustration of the flag pattern. Rectangle Pattern — Another classical chart formation that is often seen within the price action is the rectangle pattern. Most times, the rectangle pattern is considered a continuation pattern, but sometimes it occurs as a reversal pattern. When it occurs as a reversal pattern is referred to as a rectangle top, or rectangle bottom.

Regardless, the price action within the rectangle structure will consolidate between a horizontal resistance level, and a horizontal support level. These horizontal price levels will form what appears as a rectangle or a parallel price channel. The price action should be contained within the rectangle structure.

The high probability play would be to wait for a breakout from the rectangle pattern that aligns with the larger trend. Below you can see an illustration of the rectangle formation. There are certain steps that you can take as a trader to increase your chances of achieving a high probability trading strategy that works in the market.

We discussed some different types of technical chart patterns as a starting point for building a profitable trading strategy. There are countless other trading techniques that you can explore as well. However, there is one important trading concept that you should know because it will benefit any type of trading methodology used. And this concept that I am referring to is called, Confluence.

Confluence, as it pertains to trading the market, means that we should seek to have several different, uncorrelated market signals that are pointing to and confirming the same underlying premise.

In other words, we would look for bullish confluence when we are seeking to take a long position, and conversely, we would want to see bearish confluence when we are seeking to take a short position. Now, an important point about confluence that needs to be stressed is that we should be using non-correlated analysis techniques or indicators to confirm the trade. Many traders are under the impression that confluence simply means that all of your preferred indicators should be providing you confirmation on the trade.

However, some of these traders fail to realize that many technical indicators are redundant and as such they may not provide unique information. For example, some traders are keen on utilizing RSI , Stochastics , and MACD technical indicators. All of these indicators are considered momentum indicators.

As such, if you rely exclusively on this class of indicators for confirmation , then you may be mistaken in believing that you are achieving a true level of market confluence. The reason being is that true market confluence relies on receiving the confirmation from a non-correlated analysis technique or indicator. This is an important distinction that traders need to keep in mind if they hope to find the highest probability trade set ups in their chosen market.

An example of a high probability trading scenario that utilizes true confluence would include confirmation coming from a momentum indicator such as RSI, a horizontal support resistance level, and a candlestick pattern formation.

All three of these market analysis techniques are uncorrelated in nature. Any one of these could provide for a viable trading signal, however, when they are combined, they can result in achieving a much higher probability of success on the trade. You can use a countless array of different combinations in an attempt to build your own high probability trading model. Support and resistance is used from the biggest of the biggest guys in the world, such as the bank's, the trading organizations and brokers, right down to the smallest retail traders, and everyone in between.

It is literally used by almost everyone and that is what makes it so POWERFUL. For the resistance level to hold, the bears the sellers will need to be stronger than what the buyers bulls are. If we think of the market as I have just explained it, and we think of the many different participants, each time a support or resistance level comes into play, there is a fresh wave of orders trading the support or resistance level.

For example, if there is a really obvious resistance level, then a lot of people are going to look to enter short bearish trades, looking for the resistance level to hold. If you are hunting your trade setups from the daily chart, and then using the daily charts major levels to find your trigger signals, it means you will always be assured of using major support and resistance levels that you know the rest of the market is also keeping a close eye on.

If however, you start going down to the intraday charts, such as the 4 hour, 1 hour, or even lower, and then finding support and resistance, you run the huge risk of making trades from really weak and insignificant levels. Below, I go through the exact routine of how you want to be doing this, so that you can both have the highest probability setups, and also, cut it down to the smallest amount of time possible going through your charts. What you want to make sure though, is that when you are picking your levels on the daily chart, you are only picking levels that you actually want to make trades at.

You can market profit targets and stop loss levels if and when you find a trade. The key to doing that is in the way you go about marking up your key support and resistance levels, and after that, how you go about hunting your trades during the week. There is a really good way that can speed up the amount of time it takes you to go through your charts and to hunt for trades. The fast, logical, and efficient way is based around marking support and resistance levels on the daily charts and having a clear, set routine.

The routine to find the best setups and cut out hours of wasted time starts Sunday night or anytime over the weekend you have time, as long as it is before the market opens. You go through all your charts and mark up your major daily support and resistance levels, remembering that you are ONLY marking the major and obvious levels that you would like to hunt for trades at, should price move into it.

Once you have your support and resistance levels plotted, it is then just a matter of during the week, following the market, and adjusting them as price moves. As we will discuss in just a moment, you can look for trades on smaller time frames a lot quicker and without going through a ton of charts wasting your time using the preparation work you have already put in.

The reason you have marked your levels on a daily chart is so that no matter what time frame you go to, whether it is a 15 minute time frame or staying right on the daily chart, you know that the support or resistance level is a major level. As already discussed at length, the major levels are where the major supply and demand points are, and that is where the bulls and bears have the biggest battles for control. This next part of the routine is super important to your week and super important to either how long you spend looking at your charts and how much time you have for other things you want to spend time on.

A lot of traders get this part wrong and in turn, it costs them because they sit in front of their computer for far too long! A lot of traders wait for every 8 hour candle close, every 4 hour candle close, and every 1 hour candle close. A trader doing it like this may have anywhere from pairs and markets in which they are watching for setups, so each time a candle closes, they have to go through every single pair and look for a potential setup.

You could imagine how long this takes if they are going through 60 pairs individually and potentially 10 times or more per day which a lot of traders do. The simple reason for this is; even if the trader does find a trade trigger, they still need to then look for a compelling support or resistance level to back up the trigger signal. They may have found the trigger first, but there is no key level.

The major risk a trader faces when finding trades this way is that now they have found the trigger first. Will their mind try to convince them that there really is a solid level there to make a trade when the level is not a solid one at all? This is a very risky way of doing it because the price action story is king. To speed up your routine, what you should be doing is monitoring the major levels that you have marked on your daily charts.

You do not have to go to every candle close, analyze the candle to see if it has formed a trigger, and if it has, try and find a suitable level. Chart example below shows price forming a Bearish Engulfing Bar on 30 minute chart using the same daily chart level as daily chart above. NOTE: You do not have to trade smaller time frames and can trade the daily charts only. You can use your MT4 or MT5 charts to send you a price alert to your phone or email and tell you when price has got close to your level or broken it.

Pretty cool huh! Making high probability trades is more than just entering trades. It is your whole mindset and trading preparation. The price action story is king. Once you have found the best story that stacks the odds in your favor, finding the entry becomes confirmation.

This lesson has taken some explaining, but it is more than worth it because it can save you a heck of a lot of time in front of the charts. I try to avoid trading the end of the impulse, the start of the correction, and the middle of the correction. Our top favorite day trading setups include setups that have been the most profitable for us like:.

The basic premise behind the breakout setup is to enter right when the price breaks a key level. Now, a key level can be anything from simple support or resistance level, a big round number, a moving average, previous swing high or swing low, etc. A recurring intraday setup you can use every single day in the forex market is the London range breakout setup. You can learn more about this setup here: How to Trade the London Breakout Strategy with One Trick.

Usually, at the start of the London and New York session, the forex market will start with strong impulsive waves. But, since nothing moves in a straight line, the price will often pull back giving us another opportunity to enter the market.

Your entry with this setup is going to be once the pullback starts to fade away and the chart prints the first red candle for bullish pullbacks or green candle for bearish pullback. Catching these types of scalping setups only work if you already have established a directional bias.

If you want to learn more about how to establish a directional bias check our guide here: OHL Strategy for Day Trading. Pivot Points is a great indicator to gauge dynamic support and resistance levels. One of the easiest trade setups using pivot points is to buy at support and sell at resistance. When the price interacts with these pivot points it can sometimes produce a decent amount of momentum for a nice quick profit. If you want to learn the basics of pivot points and how not to use them, check our guide here: How to Trade with Pivot Points the Right Way.

A trade setup represents the total number of trading conditions that need to be satisfied before you consider entering a trade. The average income of a day trader depends on the account balance and position size per trade. The best option trading strategies is the long Call and long Put strategies. The long call strategy profits if the stock price is above the strike price at expiration. At the same time, the long put strategy profits when the stock price is below the strike price before the expiration.

Finding a good trade setup comes down to your ability to correctly read the price action. A rule-based trading process is the best way to look after a trade setup.

The best setup for trading is the one that works best for you. Something that might work for one trader might not work for another trader. I use the concepts of decision spots, triggers, confluence, and wide-open space to judge the best and highest probability setups.

We specialize in teaching traders of all skill levels how to trade stocks, options, forex, cryptocurrencies, commodities, and more. Our mission is to address the lack of good information for market traders and to simplify trading education by giving readers a detailed plan with step-by-step rules to follow. In binary trading there are high level of risk which you must be willing to accept in order to be able to invest and trade to make winnings,today I thank God that I am an expert in binary trading who has taught others the strategies on binary and forex trade in order to win trade and am still willing to teach with prooves whosoever is interested to know how I made it big in binary and forex trading.

you can contact me via Jerckg gmail. This step-by-step guide will show you an easy way to trade with the MACD indicator. Get the free guide by entering your email now!

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by TradingStrategyGuides Last updated Nov 1, All Strategies , Forex Basics , Forex Strategies , Trading Psychology , Trading Survival Skills 7 comments. The Forex market is constantly offering lower and higher quality trade setups. It is our job as traders to scan, recognize, select, enter and exit the ones with the best odds and reward to risk.

The best way is via a strategy. A Forex strategy helps identify setups with a long-term edge because it allows traders to analyze the charts with a fixed process and rules. Traders can tackle the market either via a discretionary or non-discretionary system. The discretionary method provides the advantage that traders can make a final judgment whether any one particular setup has a decent probability of succeeding. In that way, traders can choose higher quality setups and ignore lower quality setups within their strategy.

This article explains a simple tactic that helps Forex traders recognize the high probability trade setup s with help from a few trading setups examples. You can also take our Trader Profile Quiz. New information is available on all currency pairs and all time frames every minute. The market is basically in constant change and each moment offers the potential for a new setup. Many of these moments, however, do not provide an edge to the trader. These setups do NOT offer a distinct advantage and have a low probability of success.

Setups with a high probability of success have a certain scarcity. The Forex trader must wait patiently for these setups to occur, like a tiger waiting for its prey, and then execute with discipline when the moment arrives. This is when introducing the concepts of decision spots and triggers are crucial!

Decision spots are important and key levels of the time frame of your choice. This is critical because setups in the middle tend to be of lower probability and setups at key levels are of higher quality.

First of all, it does not cost a trader any money. Most importantly, traders do not have to worry about missing a setup, chasing a setup, entering a setup too soon, etc. It is an enormous help for remaining patient and keeping the discipline needed to succeed in trading.

Plus traders can avoid revenge trading by keeping a cool mindset. Taking too many doubtful trades can easily lead to overtrading which leads to a slippery slope where a trader wants to earn back their money quickly. The trigger is the signal of interest a trader is waiting for. The trader has been patiently waiting for the price to move to one of their decision spots.

The trigger provides confirmation on how to trade at the decision level. It provides clues whether a trader will go long or short, or in other words whether they will take the break or bounce. Each Forex trader can choose their own indicators, tools, patterns, trends, and support and resistance for the roles of decision spot and trigger. There is no right or wrong method and you should pick something which you like to use and that matches your trading plan and psychology.

With that said, I will now present to you my own preferences for various decision spots and triggers and it is up to you if you use the same. For decision spots, my number one tool is the strike trigger candle and trend lines. Runners-up are support and resistance , patterns, and moving averages.

For triggers, my number one tool is the candlestick and candlestick patterns. Runners-up are fractals and trend lines. Here is an example: the price is in an uptrend but far from support. After a while, the price moves back to the support trend line.

The trend line is the decision spot. Price can then show 2 different reactions via candlesticks. Hence the candlestick pattern is the trigger:. Other sweet spots can be identified by using the concepts of impulse and correction. Price is always in either of the two and it depends on the strategy for which one is better for you. For my own trading, I prefer catching the completion of a correction, the middle of an impulse and also the start of the impulse.

I try to avoid trading the end of the impulse, the start of the correction, and the middle of the correction. Our top favorite day trading setups include setups that have been the most profitable for us like:. The basic premise behind the breakout setup is to enter right when the price breaks a key level. Now, a key level can be anything from simple support or resistance level, a big round number, a moving average, previous swing high or swing low, etc.

A recurring intraday setup you can use every single day in the forex market is the London range breakout setup. You can learn more about this setup here: How to Trade the London Breakout Strategy with One Trick.

Usually, at the start of the London and New York session, the forex market will start with strong impulsive waves. But, since nothing moves in a straight line, the price will often pull back giving us another opportunity to enter the market.

Your entry with this setup is going to be once the pullback starts to fade away and the chart prints the first red candle for bullish pullbacks or green candle for bearish pullback. Catching these types of scalping setups only work if you already have established a directional bias.

If you want to learn more about how to establish a directional bias check our guide here: OHL Strategy for Day Trading. Pivot Points is a great indicator to gauge dynamic support and resistance levels. One of the easiest trade setups using pivot points is to buy at support and sell at resistance. When the price interacts with these pivot points it can sometimes produce a decent amount of momentum for a nice quick profit.

If you want to learn the basics of pivot points and how not to use them, check our guide here: How to Trade with Pivot Points the Right Way. A trade setup represents the total number of trading conditions that need to be satisfied before you consider entering a trade. The average income of a day trader depends on the account balance and position size per trade.

The best option trading strategies is the long Call and long Put strategies. The long call strategy profits if the stock price is above the strike price at expiration. At the same time, the long put strategy profits when the stock price is below the strike price before the expiration. Finding a good trade setup comes down to your ability to correctly read the price action. A rule-based trading process is the best way to look after a trade setup.

The best setup for trading is the one that works best for you. Something that might work for one trader might not work for another trader. I use the concepts of decision spots, triggers, confluence, and wide-open space to judge the best and highest probability setups.

We specialize in teaching traders of all skill levels how to trade stocks, options, forex, cryptocurrencies, commodities, and more. Our mission is to address the lack of good information for market traders and to simplify trading education by giving readers a detailed plan with step-by-step rules to follow.

In binary trading there are high level of risk which you must be willing to accept in order to be able to invest and trade to make winnings,today I thank God that I am an expert in binary trading who has taught others the strategies on binary and forex trade in order to win trade and am still willing to teach with prooves whosoever is interested to know how I made it big in binary and forex trading.

you can contact me via Jerckg gmail. This step-by-step guide will show you an easy way to trade with the MACD indicator. Get the free guide by entering your email now! Please log in again. The login page will open in a new tab. After logging in you can close it and return to this page.

High Probability Trade Setups: 4 Methods by TradingStrategyGuides Last updated Nov 1, All Strategies , Forex Basics , Forex Strategies , Trading Psychology , Trading Survival Skills 7 comments. See below: Table of Contents hide. WkYxnTGh says:. September 25, at pm.

Jerck says:. August 30, at pm. XbictIRh says:. November 30, at am. dew says:. February 13, at am. Search Our Site Search for:. Categories Advanced Training All Strategies Chart Pattern Strategies 55 Cryptocurrency Strategies 47 Forex Basics 43 Forex Strategies Indicator Strategies 69 Indicators 44 Most Popular 20 Options Trading Strategies 30 Price Action Strategies 36 Stock Trading Strategies 62 Trading Programming 5 Trading Psychology 10 Trading Survival Skills Recent Posts Risk of Ruin - Trading Long Term - Know Your Probability 4 Simple Step Event Contract Trading Strategy Using Kalshi Basic Order Types in Trading: Market Order, Limit Order, Stop Order Top Beginners NFT Trading Strategy - Easy To Follow Strategy A Simple Day Trading Forex Strategy - Moving Average Day Trader A Profitable Shiba Inu Trading Strategy Meme Stock Bounce Strategy - Low Risk Meme Stock Strategy A Step-By-Step Strategy Guide For Contrarian Traders The Complete Guide to Fibonacci Trading Signs Of A True And False Range Breakout EFC Indicator: MT4 Indicator Reversal Trading Tool Fibonacci Trend Line Strategy - Simple Fibonacci Trading Strategy Best Gaming Cryptocurrencies to Invest In Crypto Trade Journal Software Review : Coin Market Manager Best Buy and Hold Trading Strategy.

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What Can I Change? We've backtested in real-life market conditions over the past 16 years and the results speak for themselves Buy when you see a higher low is being formed and the stock is breaking the upper trendline. Listen UP…. A trade setup represents the total number of trading conditions that need to be satisfied before you consider entering a trade. High Probability Trading Setups-How and Where Do They Form? I will show you a few examples of how prices react to support and resistance levels on larger time frames so you will understand what I talking about and I may just turn you into a believer.

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