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Highest Probability Trading Setups for Consistent Profits

Handling volatility and mitigating risk is something that all forex traders are looking forward to. Nobody wants to have to look at their positions 24/7 and have minor heart attacks each time their account goes in the red. Of course, there can never be trading without any risk, but over the years, there have been a couple of strategies set up to mitigate and minimize risk—one of which is high probability trading.

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    High probability trading is an approach initially conceptualized by the well-known forex expert, Robert Miner, who made the term in his book “High Probability Trading Strategies”. In it, Miner explains important terms like trading confluence, while also teaching you about high probability trading with important strategies for high probability trading—like the step-index strategy. Namely, defining high probability would go something like “recognizing trading opportunities with minimal risk while also ensuring profit”.

    There are, however, more details to be said about high probability trading. Continue reading to learn more.

    Best Setups of High Probability Trading for Forex

    Although the sound of it appears quite promising, high probability trading isn’t applicable in every situation—in fact, there are a couple of setups that are widely regarded as being the best ones for high probability trading in forex

    Pre-breakout Set Up

    This is one of the simplest setups that has had a high success rate for years on end, and will probably continue to do so in the years to come. The instructions are clear: monitor the chart closely and pay attention to every little detail. At the first clear sign of a breakout, put your position and determine a profit goal. Consider checking out Robert Miner's setups book to learn more about pre-breakouts and how to properly utilize them.

    Trading Reversals

    The trading reversal is a slightly more complicated setup, though it’s been quite a profitable one. Take the following situation as an example: let’s say a forex pair has been in a consistent upward trend and a couple of indicators (like the Moving Average, signals, and cd) state that it will remain that way. The moment the chart dips and the price falls, you immediately put a long position and wait until the previous high is reached.

    Failure Test

    Failure tests rely on determining key support levels and waiting for them to get broken - whether they are breaks on an upward or downward trend. Support levels get broken all the time in a volatile market, so failure tests are something you can make relatively good use of if you get the hang of them. Failure tests are also theoretically explained in plenty of books, magazines, and other educational material provided by the top brokers for forex trading.

    What Strategies Should You Use for High Probability Trading?

    Once you've learned what high probability trading is and why it's good, you need to learn more about the best strategies for beginner forex traders:

    News Trading

    News trading is a relatively simple concept to grasp, and it doesn’t require knowing too much about the market upfront. Namely, a news trading strategy means that you’ll put your positions based on the recent world news as well as market expectations, and make a quick judgment on how to trade. It could well be a contender for the most profitable trading strategy as long as you get the right news at the right time. An important point to note is that you have to have immediate access to world news—otherwise, you’ll miss key trading opportunities and lose out on money.

    Additionally, consider taking a look at our weekly forex forecast to help you out.

    Swing Trading

    Swing trading strategies are a slightly more advanced approach, being best suited for intermediate traders who know a thing or two about the market. Namely, this trading strategy encompasses trading on both sides of the market, taking advantage of the market oscillations as prices swing up and down. It requires opening more positions than traditional trading strategies, as you’re always waiting to sell on the next rise, or buy on the next low. Keep in mind that it's not the most accurate forex strategy, but it could be quite profitable if it's in the right hands.

    Trend Trading

    Trend trading largely relies on using technical analysis and specific indicators to determine the probable trend of the market. This means that in a bull market (rising prices) you’ll put long positions and acquire profit at the first sign of the market slowing down. It's a strategy old as the market itself and it's often regarded as the highest probability options strategy. However, the biggest problem traders have with this strategy is that it requires paying a lot of attention and accurately determining the market trend.

    Is High Probability Trading Worth a Try?

    So, we’ve summarized what high probability trading encompasses, why it’s good, and what are some of the top forex trading strategies you can look to implement in your trading. So, is high probability trading worth a try? Our verdict would say that yes, high probability trading is worth a try, especially if you’re a beginner without too much market knowledge.

    It’s a well-known fact that over 70-80% of forex traders lose money in their first 12 months of trading—this doesn’t have to be true for you. Even though high probability trading probably won’t make you a millionaire overnight, it’s one of the safest approaches you can take—especially as a beginner. Taking it slow will probably be one of the best choices you’ll make when trading forex, and there’s a low probability you’ll ever lose too much money. Lastly, consider checking out our list of top brokers for forex trading to make sure you take your first steps in the right direction

    You might also be interested in reading the below articles:

    FAQs

    Is there a 100% trading strategy?

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    A 100% trading strategy does not exist.

    What is the 5-3-1 trading strategy?

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    The 5-3-1 trading strategy is a popular approach to Forex education. It stands for five currency pairs to learn and trade, three Forex trading strategies to master and use to trade the five currency pairs, and one time to place trades, the same time every day.

    What is the simplest, most profitable trading strategy?

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    The simplest strategy relies on one indicator but will not deliver consistent profits. Therefore, the closest strategy would be a three-indicator strategy, resulting in the highest probability trading setup for select market conditions.

    Which setup is best for trading?

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    The best setup for trading is the one a trader developed, mastered, and learned to trust.

    What is the highest probability trading strategy?

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    In Forex, the highest probability trading strategy will probably be one which seeks to trade reversals after unusually large directional price movement.

    DailyForex.com Team
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    The DailyForex.com team is comprised of analysts and researchers from around the world who watch the market throughout the day to provide you with unique perspectives and helpful analysis that can help improve your Forex trading.
     

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