by: Eamon Phillips on 29th June 2009
In high probability trading systems you filter out trades that do not meet your 3:1 risk reward calculation. As you will see with trades, you are more likely to get it wrong than right and this is more likey as you build experience. So these are the questions that can occur with these systems
1. Is the entry price technical?
2. Is the Stop loss price technical?
3. Is the target price realistic?
The first and second questions are ok! Because most trading systems have rules that are clear and easy to follow. The third rule is the trickiest one to assess.
It's hard because you need to know what the true target is. Have you been too ambitious in where you think the price will go? Is the set up correct there is a whole plethora of things to consider . But the most important thing is the outcome.
The outcome means that is I place a trade what are my realistic changes of winning and making money. The reason traders like high probability trades is because it gives the false sense of security and emotional support of a positive outcome. |