There’s a well-known but often forgotten fact when it comes to making any kind of trade – it’s all about the odds. You are genuinely not going to win every trade that you go for, which is something else that’s important to remember. But if you know how to play the odds in trading, you know how to win most of the time, and that is a good thing. That is as good as it gets in this game.
You need a good chart. You need a chart that you’ve studied, worked on, created with an understanding of what it is you’re doing. And you need to know that chart so well that you develop a feeling about it. In this way, you can play the odds in trading. It’s a mixture of intuition (with experience behind it) and study. Put these two things together and you’re going to end up winning more times than not. And that, after all, is the aim of this game. Knowing your chart back to front and inside out will give you a distinct advantage over those who do not.
No, we’re not advocating any kind of weird and wonderful wizardry when it comes to understanding how to play the odds in trading. We’re just saying that if you have spent the right amount of time and effort on your chart, that chart will, for the majority of the time, offer you good trades. You are putting the odds in your favour because you are using a chart that is favourable. So you can see just how important it is to get that initial piece of work right in the first place. Everything else just falls into line after that. Entering a trade at the right point for the right amount is a skill that comes with time and experience – and a good chart.
Another tip that will help you to play the odds in trading is to widen your stops. Having slightly wider stops than you might usually have means you can stay in the trade that little bit longer. Check out what you are trading first, and do some research. A good example is the EURUSD, which moves around 100 pips every day. In this case, having a stop of under 50 pips won’t do you any favours.
We mentioned earlier that we weren’t advocating any magical tricks to help you play the odds in trading. And we meant it. But having a few helpful strategies up your sleeve that mean you know exactly when and where to stop or start a trade isn’t magic – it’s common sense. As you gain more trading experience your bags of tricks (strategies, that’s what we mean, of course!) will grow and you’ll be able to spot the good, the bad, and the ugly in trades from a mile off. Trading only when your own strategies make sense and are spot on give you an added level of security, allowing you to play the odds in trading successfully.