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.
Any one of the factors itself should give a trader an edge. A trader should be able to implement just a couple factors to build a successful trading plan. Master the dual-time-frame-momentum setup and the price support/resistance targets. Plus, master simple and objective entry and exit strategies and you should be able to develop a simple but profitable trading plan. Notice that I said “master.” That means you have identified the specific and objective momentum and price conditions that must be in place before a trade is considered, and you have “mastered” simple entry and exit strategies for any trade. “Mastery” also means implementing a trade decision each and every time a setup meets the conditions of your trading plan. Failure to act at the appropriate time will definitely result in a failed outcome.
Implementing a very simple plan with just one or two pieces of information (conditions) and simple entry to exit strategies may not result in excessive profits, but it is the first step toward greater success. If you are not able to master the simple procedures, you will never master the more complex.