High Probability Trade Setups
March 26, 2013 at 3:24 PM (QQQ)(DIA)(SPY)(GLD)(FB)
Use High Probability Setups To Increase Your Winning Trades
There are those rare individuals who can just look at a market, size it up, put on a trade and knock it out of the park. Are you one of those guys? Me either. I thought I was. In fact, I was certain of it, so I would open my charts, have a look around and take a stab at it.. and then another, and another.. until my account looked like Swiss cheese. Finally sanity overwhelmed me and I decided there had to be a better way.
Turns out, the better way was learning to recognize a High Probability Setup. So how does one define a high probability setup? Basically, it's about entering the market at a specific price either long or short, where the odds are greater that price will travel to your Target before it hits your Stop.
How do I find these? There are several ways... you can research historic charts to see if something jumps out at you, you can read books on Technical Analysis that explain specific Chart Patterns such as the Head and Shoulders discussed in our last article along with many others and how to trade them. You can learn to draw Fibs using a Fibonacci Tool or Fib Calculator, you can invest time and money becoming an Elliot Wave Practitioner where your high probability setup will be defined by counting which wave you are currently in. Other methods will use specific indicators such as Stochastics or MACD or RSI. Many of these techniques can be very subjective and the list is literally endless......
Narrowing the field - With so many options, one can easily become overwhelmed. Keep in mind that the "reason", many if not all of these work, is because a large number of people are watching for the exact same pattern, signal, indication, wave, fib level, etc... The more people watching and then acting on a pattern or indication, creates what I call a self-fulfilling prophecy. In other words, if enough people believe a market will rally at a 50% retracement and they all act on their belief at the same time, price will indeed rally as a result of the buying pressure coming into the market.
Let others do the work for you - With so many methods to choose from, you can never know with certainty which one the "herd" will act on next. If buyers start to swarm the market at a 50% retracement, or Wave 3, or a Stochastic cross... Let Me In! As you spend more time around the markets you will start to understand many of the methods I've discussed in this article. In fact, you might be able to say "We have a 50% retracement, on Wave 3 of a Downward Facing Dog, behind a Flying Hibachi with a Stochastic Cross on Rollover Day. (whew) Now you have what is called confluence, many things coming together at the same time. So if the Fib traders, the Elliot traders, the Stochastic traders and the Candlestick maker are all getting a buy signal at the same time - Let Me In!
Getting realistic - In all honesty, it will be a rare moment in the market when all things come together at once. Realistically, how much can you watch and monitor and act on? Hmmm.... What if you just watched the herd. Forget the Waves for a moment, stop Fibbing for a bit, just observe the herd. Some will argue that the Smart Money and the Herd are two different animals. My personal definition of the herd is whatever, or whomever, is moving the market at any given moment.
Checks and Balances - By remaining keenly aware of Major Support and Resistance in any market (both fixed and dynamic), you are in a unique position to profit equally from a 5th Wave Rally or a 62% retracement, without even understanding what either of those are. When the herd moves, be it one beast or many, the ground will shake and the footprints will be obvious. If, you know what to look for...
Confused? Don't be. The CFRN Slingshot can be traded as a standalone entity. We do it every single day in the Live Trading Room. However, as mentioned in the last article, if you have a favorite chart pattern, or indicator, or methodology, such as we've discussed today, you can bring new life into your trading.
Take your Trading to the NEXT LEVEL! Why settle for the high probability offered by only one setup, method, system, or indicator? The CFRN Slingshot embraces the underlying rythym of the market. It doesn't matter what is causing the market to move, it can be one thing or many. The Slingshot simply enables you to act on it with confidence, without hesitation, with minimal risk. Remember, we never risk more than 8 ticks on any trade in the Live Trading Room.
As you grow and mature as a Trader, you will learn to take any Chart Pattern, Indicator, Wave or Methodology, and view it through the lens of The CFRN Slingshot. Almost every way of trading I've mentioned in this article requires a certain amount of subjectivity. Say goodbye to ambiguity forever. Once you place a high probability setup in the cross-hairs of The Slingshot - everything comes into crystal clear focus. You will know your entry price To The TICK!
The Final Analysis - Whether you use the High Probability Setup built into The Slingshot, or layer it over your favorite methods, your trading will be forever changed. No hesitation, no ambiguity, no confusion. Imagine showing up for work each day, filled with excitement and anticipation, not dread and desperation. We'll never allow you to become cocky or arrogant, but we will teach you to approach each unique opportunity in the market with a fresh sense of clarity, destiny and purpose. You will understand what it means to walk in confidence, cloaked in humility.
Spend the next 5 Days trading The Slingshot. That's right, use it for 5 Days, no credit card required. If it's not for you, leave it on the counter. However, if you see the value in our tools as well as our community, we will invite you to become a CFRN Partner. To get started...
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