A high probability trade is a trade that has a greater chance of success than a regular trade.
So, how can you find these high probability trades? There are a few things that you can observe to find that golden confluence of various important things such as a support level, demand zone, Fibonacci level, moving average, volume, RSI, etc. The confluence zone can be a combination of any of these things.
In the example above, you can notice the following things: 1. The market structure is bullish before the breakout, which is evident from the formation of higher highs and higher lows. 2. The price is consolidated in the rectangle/parallel channel for a good amount of time. 3. As soon as the price reached the previous support level, the selling pressure started to decrease. 4. When the price touched 200MA/EMA, the buyers stepped in and there was a good buying. 5. The 0.618 Fibonacci level also acted as a support and overlapped with the 200 moving average. 6. The buying pressure can be seen by an increase in the volume in the last few sessions before the breakout. 7. When the price breaks above the previous major resistance with a massive bullish candle, there is a massive volume expansion. 8. We always look for some reversal or neutral candlesticks in the confluence zone. In the chart above, at the point of interaction with the moving average and the Fibonacci level, we can see the formation of hammer candlesticks and spinning top.
High Probability trade checklist: 1. Market structure 2. Consolidation before the Breakout 3. Support-Resistance levels 4. Supply-Demand zones 5. Location of 200MA or 200EMA 6. Overlap with a Fibonacci level 7. Candlestick pattern and the size of candles 8. Volume expansion
You can read and revise this post until you master the concepts. I hope you find this post useful. Also, if anyone is interested in getting a PDF version of this thread, then you can message me, I'll provide it.
Disclaimer: This is NOT investment advice. This post is meant for learning purposes only. Invest your capital at your own risk.
@johntradingwick, please send me too. Thanks in advance. Good work 💯
phobia666
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Thanks for the wonderful points about conditions required for entry.
Can you also make one for the condition required for exit?
In many cases, the trade does not hit Fibonacci target levels or resistance target swing level, may reverse midway and hit SL.
How to identify the conditions required for exit?
johntradingwick
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@phobia666, Hi. I didn't include the exit conditions because everyone has a different trading strategy and the exit levels are dependent on it. But I'll write about all the necessary things that can be looked at before exiting a position. Thank you.
Thank you for your valuable contribution to the TradingView community and keep up the good work!
Good clear chart with good clear explanation.