Continue reading...Recently, I wrote an article about trading and gambling. Specifically, how trading is the one form of speculation on the planet that allows you to stack the odds in your favor before putting any of your hard earned money at risk. That discussion was fine but now I want to look at how we qualify the difference between some higher probability opportunities and lower ones as knowing the difference is a key to success.
In the Extended Learning Track (XLT) ? Futures Trading and Forex Trading programs, a market situation we are often faced with is a gap. We use a simple checklist based on objective information to determine exactly what action to take (or not to take). The checklist helps us determine the probabilities, risk, and reward. Here is how some of it works:
1) Gap up into an objective supply (resistance) level
In a downtrend, selling short on a gap higher into supply is likely the highest probability trading opportunity there is. This is because only your...
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