Trade “Middle Waves” For a High Probability of Success

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The decision to take control of your financial future is exciting. You have to make many decisions. Decisions include which strategies to apply, how long and which market you are going to trade. The single most important decision may be trading style: How the trader will select and execute trades. The two most common methods are discretionary and mechanical. Many people struggle with discretionary trading.

This is because of its built-in flexibility and subjectivity. This provides too much room for emotion-driven decisions. Conversely, others struggle with using purely mechanical, automated systems because of their rigidity and complexity. There is a third option that often is overlooked: This is the definition of high probability trading: So what options trading high probability success are we talking about here?

And in this video tutorial, we options trading high probability help you figure out how to pin your probability of success at any particular strike price. T here are four key inputs to the Probability Model that probability traders focus on: It then becomes a simple matter to determine the range of prices and the POP based on the expected move for a given level of risk.

Sell options with options trading high probability Implied Volatility and you will receive much option premium. By selecting the right strategy and selling options a few strikes from the current market price you create high probability trades. Think or Swim platform and Tastyworks has the possibility to show how likely it is an option is options trading high probability end up in the money. If your platform does not have this possibility You can also use the option greek Delta. Options strike near the market value is more likely to end up in the money than options which are further away.

A lot of trades are centred around 1 Standard deviation SD. If you are using options for consistent income there is a certain risk you take. Of course, you want to take as low risk as possible. With the amount of risk you take comes also the amount of profit you make. Nowadays it is possible to determine the amount of risk you want to options trading high probability when selecting options for consistent income.

Learn more about this topic by watching the video below. Your email address will not be published. Placing high probability trades is actually incredibly easy once you know where to look And in this video tutorial, we will help you figure out how to pin options trading high probability probability of success at any particular strike price.

Which Probability options trading high probability Profit Sell options with high Implied Volatility and you will receive much option premium. Leave a Reply Cancel reply Your email address will not be published.

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A common trading problem is that if you wait too long to enter a trade—until everything looks perfect—the trend is likely almost over. Figure 2 shows the start of an uptrend. Then, on a strong rally it makes a higher high followed by a higher low. This provides a high probability that the trend has shifted—at least temporarily. In this case, after the higher high, we need to wait for a pullback.

As long as the pullback stays above the prior low we are looking for a long trade, because we now have a higher-high and higher-low, which means either a wave 3 preferably or wave c is about to unfold and we want to be a part of it. Figure 3 shows the basic set-up. Based on the higher-higher, we want to go long, but need to wait for a pullback to do so. We let the pullback materialize, but as soon as the price starts moving higher again we take a long position.

Figure 3 shows an entry point where a very strong up bar moves above the highs of prior pullback-bars, indicating the buying is resuming. A stop loss is placed just below the most recent low on the current pullback or above the recent high on the current pullback if looking to go short in a downtrend. With binary options your profit is already set, but for those trading traditional markets, a Fibonacci Extension tool can be used.

If the pullback is relatively shallow compared to the prior wave, as it is in Figure 4, exit at the As a general rule, use the first extension level which is above the prior high in an uptrend, as shown in Figure 4 or below the prior low in a downtrend. The rectangle at the This strategy takes advantage of what appears to be the middle of a trend. There is no way to know for sure when the trade is taken that it will work out.

The Set-Up To find the middle of an uptrend, you need a higher high and a higher low. To find the middle of a downtrend, you need a lower low and a lower high. Setup Figure 3 shows the basic set-up. Target Final Word This strategy takes advantage of what appears to be the middle of a trend.