Apiary Fund Blog

How to Find High Probability Trade Setups

[fa icon="calendar"] Nov 15, 2016 5:10:16 PM / by Shawn Lucas

Shawn Lucas

A question a trader might ask themselves frequently is, "How can I identify high probability trades?"


The answer to how to find high probability trade setups is simpler than you might initially think; however, it requires discipline and work. When you sit down for a good trading session, finding a trade setup isn’t that hard-but there are trading setups, and then there are high probability trading setups. In fact, in any given trading session you’ll only have a few setups with that coveted high probability quality that pays so handsomely!

So, what are those qualities in a setup that make it high probability?

We’ve identified some qualities of a high probability trade: (In order of importance)

1.     Trend.  Does the trend support the direction of the trade?

2.     Momentum.  Is momentum building or slowing?

3.     Support and Resistance.  Is the trigger above or below support?

4.     Pattern.  Is there a pattern to support the trade?

5.     Volatility.  Is there enough volatility to create a profit?

6.     Time.  Are you at the beginning of a time cycle?

7.     Indicators.  Does your favorite indicator support the setup?

Like a good attorney, you can use the qualities listed above to build a solid case for a high probability trade.  Anyone can create a check list, it's the people able to actually fill in the box that are successful. If you don’t have everything aligned, then the probability of a successful trade drops.  If your trading setup has these qualities in perfect alignment, then there’s a high probability the trade will work to your favor. Sounds simple, right?

This is where discipline come in. It's easy to list the qualities a trading set up needs to be considered "high probability," but you're going to need to make a conscious effort when your trading to to check that these qualities align. This takes time, and mental concentration, that you might not want to spend at the moment, thinking, "the trade is happening right now." However, the disciplined trader will recognize that the trade off for following these steps is greater than the cost of time and patience.


Happy Trading!

Shawn Lucas

Topics: Trader Development, Success, Trading Habits

Shawn Lucas

Written by Shawn Lucas

Shawn Lucas is the founder and fund manager at the Apiary Fund. He began his career as a broker where he worked the trading desk and processed trades for high net worth investors. An expert in the field of technical and economic analysis of the financial markets, Shawn has since established his reputation as a thought leader and speaker in the financial services industry. Shawn's simple and methodical approach to the markets has helped thousands of investors better understand and improve their performance and profitability in the financial markets.

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