High Probability Trading Strategies

I’ve had a few emails and comments that a Dual Time Frame Momentum setup did not result in a market reversal. Any technical analysis will “fail” whether it is a support/resistance projection, momentum strategy, pattern break etc. As I say over and over again in the book, the purpose of all technical analysis is to “identify conditions with a high probability outcome and acceptable capital exposure.”

The Dual Time Frame Momentum trade filter will help identify markets with a high probability of making a reversal AND a specific stop point in the event the market does not make the reversal. This is absolutely the best that can be hoped for.

Employ the Dual Time Frame Momentum Reversal filter as described in High Probability Trading Strategies and you will find it will help to keep you out of marginal trades, often nail a reversal within tickes and have very minimum and acceptable losses when a market does not reverse.

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Last Thursday, March 24, the S&P made a daily close above the potential W.1 or A closing low of 1296 (June ES). As my early in the day March 24 blog post described, this is an overlap and indicates the March 16 low is a Wave-C low, potentially the end of an ABC correction although the S&P may continue in a more complex correction.

The short lookbackk OS weekly momentum at the March 16 low suggested the March 16 low would not just be temporary. The weekly momentum has since made a bullish reversal which suggests the net trend will be sideways to up for at least 2-3 weeks.

With price at the 78.6% retracement for the past few days and the daily momentum OB, we should have at least a 3-5 day corrective decline very soon but the S&P is likely to eventually continue to a new high above the Feb. high.

This blog is not meant to be a trade advisory, but to help you to learn how to use the technnical and trading strategies taught in High Probability Trade Strategies.

Markets can and do anything but the idea is to identify conditions with a high probability outcome and acceptable capital exposure.

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I hope all book readers have incorporated Multiple Time Frame Momentum setups as part of their trading plan. I describe in the book how you can use almost any price oscillators for this critical trade filter. I’ve been doing some more short term trading the past few weeks since I am settled for the summer-fall season before I leave for warmer climates this winter.

I continue to be amazed at how well the Dual (and triple)-Time-Frame-Momentum setups alert me to high probability trades and, just as important, keep me out of less optimal trades when I get excited about a pattern or price position for the Dual-Time-Frame-Momentum is not setup.

In DT, once I’ve identified the 60m momentum position, I just set the 15m minute DTosc reversal alert to send me a text message and go about my business until I get the alert that the setup is complete. Then I can take a quick look at the chart to verify the position of set the buy/sell stop for the trade.

Don’t fail to incorporate this power strategy with any market and any time frame. Your results should improve dramatically.

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Many traders, particularly those who are new or have not been successful, make trading way to complicated. They take in way too much information, much which is irrelevant to identify a trade opportunity. Often they have very extensive and complicated trading plans with inputs and rules that they may not understand and have not clearly thought out how they will benefit the trading decision.

Just a couple of logical, well thought-out rules should be all a trader needs to gain at least a modest but consistent profit. In High Probability Trading Strategies, I describe four key factors (pieces of information) to use to identify a condition with a high probability outcome – multiple-time-frame momentum, simple pattern position, price position and time position. Each factor is extensively described and illustrated in its own chapter and the video CD that is included with the book. A trader should master each, one at a time, until he or she not only knows how to use the information for a trading decision but why.

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The key principle of High Probability Trading Strategies is to identify conditions with a high probability outcome and acceptable capital exposure. You can never know the outcome. You can never control the outcome.

You do control what information you will use to make a trading decision, and you do control the activity of trading, to buy, sell or do nothing. To improve as a trader, only focus on what you can control. Learn to only focus on information that is relevant to your trading plan to make a trading decision. Focus on implementing your trading plan.

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