How to Use High Probability Trade Setups and Win Big

15 Price Action Patterns Insiders are Using If a hedge fund managers were using 15 specific price action patterns would you want to know?

The Forex market is constantly offering low and high probability trade setups. Our job as traders is to scan, recognize, select,ย enter, and exit the ones with the best odds and reward to risk.

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Now, the best way is by using aย strategy. A Forex strategy can help identify the highest probability trading setups with a long-term edge by allowing 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 on whether any one particular setup has a decentย probabilityย of succeeding. In that way, traders can choose the highest probability trading setups and ignore lower probability setups within their strategy.

This article explains a simple tactic that helps Forex traders recognize theย high probability trade setups with help from a few trading setup examples.

How Do I Find the Highest Probability Trading Setups?

New information is available on all currency pairs and all time frames every minute. The market is constantly changing, and each moment offers the potential for a new setup.

However, many of these moments do not provide the trader an edge toย make money while trading. These setups do NOT offer a distinct advantage and have a low probability of success.

Setups with a high probability of success have a particular scarcity. Each 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.

Nevertheless, how does a trader recognize the moments of waiting and executing? Well, this is when introducing the concepts of decision spots and triggers are crucial!

Decision Spots And Triggers.
20 2 2015 gbpusd 1hr

Waiting for the Lines in the Sand

Decision spots are essential and critical levels of the time frame of your choice. Identifying decision spots allows traders to ignore price action in the โ€˜middle of nowhere and wait for the price to reach the โ€˜lines in the sand.โ€™

This is critical because setups in the middle tend to be of lower probability, and setups at key levels are of higher quality. Using a high probability Forex strategy has enormous advantages for trading psychology.

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 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 relaxedย trading 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.

Waiting for the Action of the Trigger in High Probability Day Trading Strategies

The trigger is the signal of interest a trader is waiting for. Moreover, the trader has patiently awaited the price to move to one of their decision spots, and now the price has reached it.

You might be wondering, now what? How and when to trade?

This is what the trigger solves since it is basically a call to take action. The trigger confirms how to trade at the decision level. It provides clues as to whether a trader will go long or short, or in other words, whether they will take a break or bounce.

Waiting For The Trigger To Act.
20 2 2015 trigger

Decision Spot Vs. Trigger

Each Forex trader can choose their own indicators, tools, patterns, trends, and support and resistance for decision spot and trigger roles. There is no right or wrong method, and you should pick something that you like to use 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.

My number one tool for decision spots is the strike trigger candle and trend lines. Runners-up areย support and resistance, patterns, and moving averages.

Strike Trigger Candle And Trend Lines.
20 2 2015 strike

For triggers, my number one tool is the candlestick and candlestick patterns. Runners-up are fractals and trend lines.

Here is an example:ย The price is in an uptrend but is 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 two different reactions via candlesticks. Hence, the candlestick (pattern) is the trigger:

  • A pin bar at the trend line ร  a bounce trade.
  • A breakout candle through the trend line ร  a breakout trade (the requirement for avoiding a false breakout: a candle close to a close near the low and most of the candle through the candle).

Traders can use different tools and indicators for each of the two roles. The above is just an example but one I often use for my trading.

The Confluence Of Support.
20 2 2015 wos

โ€œSweetโ€ Spots for a High Probability Forex Strategy

The best opportunities, which we name โ€œsweetโ€ spots, are areas where a strongย confluenceย of levels and wide open space are present.

Confluence zones are the best decision spots available because they increase the probability of a trade setup succeeding. This happens because more support or resistance is available in that decision area, making the decision spot more valuable than decision spots with no confluence (see an example of confluence in the screenshot above).

Wide-open space is the potential movement a price can make after reaching the confluence zone upon a break or bounce before hitting another decision spot. The more space, the better, as it allows the trader to have more exit options.

You can identify other sweet spots by using the concepts of impulse and correction. Price is always in either of the two, depending on the strategy for which one is better for you.

For my trading, I prefer catching the completion of a correction, the middle of an impulse, and the start of the impulse. I try to avoid trading the end of the impulse, the beginning of the correction, and the middle of the correction.

Next, weโ€™ll outline the chartistโ€™s guide to the best setups for day trading.

High Probability Trade Setups for Day Trading

Our top favorite day trading setups include setups that have been the most profitable for us, such as:

  1. Breakout trade setups
  2. Scalping trade setups
  3. Trade setup pivot points

Letโ€™s go over each one of these trade setups one by one. The first trade setup is probably the easiest one to learn. Without further ado, here is why they work the way they do.

Breakout Trade Setups

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 a simple support or resistance level, a big round number, a moving average, a previous swing high or swing low, etc.

A recurring intraday setup you can use every single day in the forex market is theย London range breakout setup. If youโ€™re day trading stocks, you can try to enter when the price breaks the pre-market high.

Furthermore, if the breakout happens during the first five minutes after the opening, youโ€™re in for a strong momentum play. Here is a good example on the TESLA chart:

Breakout Trade Setup
Day trade setup

Pretty simple, right? Next, letโ€™s see how to find scalping setups.

Scalping Trade Setupsย 

The conventional impulsive-pullback setup is a great scalping setup. Usually, at the start of the London and New York session, the Forex market will start with strong impulsive waves.

However, 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 will be once the pullback starts to fade away and the chart prints the first red candle (for bullish pullbacks) or green candle (for bearish pullbacks).

Here is an example:

Scalping Trade Setupsย 
Scalping trade setup

Catching these types of scalping setups only works if you already have established a directional bias. Next, letโ€™s learn how to spot day trade setups using pivot points.

Trade Setups with Pivot Points

Pivot points are a great indicator to gauge dynamic support and resistance levels. One of the easiest trade setups using pivot points is buying at support and selling at resistance.

When the price interacts with these pivot points, it can sometimes produce a decent amount of momentum for a quick profit.

Here is a pivot point trade setup example:

Trade Setups With Pivot Points
Pivot point trade setup

If you donโ€™t knowย how to trade with pivot pointsย correctly, take the time and learn how they work. They can help you out in your trading sessions.

Final Thoughts

The essence of successful Forex trading lies in carefully identifying and executing high probability trade setups. In this article, I offered you a comprehensive guide to understanding and applying these strategies, emphasizing the importance of patience, discipline, and strategic planning.

By focusing on decision spots, triggers, confluence, and open space, traders can significantly enhance their chances of success. Remember, trading is not just about making profits. Itโ€™s about making smart, well-informed decisions that align with your overall trading plan.

I use the concepts ofย decision spots, triggers, confluence, and wide-open spaceย to judge the best and highest probability setups.

Do you use decision spots for your trading setups? How do you set up triggers?

Thanks for adding your opinion here below. I wish you a happy hunting experience, and thank you for taking the time to read and share this post!

Frequently Asked Questions

What Are Trade Setups?

A trade setup represents the total number of trading conditions that must be satisfied before entering a trade. For example, if youโ€™re a breakout trader, then at least a break of support or resistance needs to be present and maybe a close above/below the support/resistance for a trade to be considered.

How Much Do Day Traders Make Per Trade?

The average income of a day trader depends on the account balance and position size per trade. In the United States, the average retail Forex trading account size was around $5,000.

Suppose we assume a conservative example, where a day trader averages five trades per day, 15 pips per trade, and 2% risk per trade. In that case, they can make, on average, $500 per day โ€“ if we assume a 100% win rate.

What Are the Best Option Trade Setups?

The best option trading strategies are the long call and long put strategies. Now, the long call strategy profits if the stock price exceeds 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.

How to Find Good Trade Setups?

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 trader is responsible for defining all the rules for finding a trade setup.

What Is the Best Setup for Trading?

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. If youโ€™re a short-term trader, you should stick with a day trading setup, but if youโ€™re a long-term trader, you should look for bigger-picture setups.

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15 Price Action Patterns Insiders are Using If a hedge fund managers were using 15 specific price action patterns would you want to know?

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