Probability trading: The best of both worlds? The probability and forex trading to take control of your financial future by trading the markets is exhilarating and liberating.
But there are many decisions left to be made, including market selection and the desired holding period. The single most important decision may be trading style: How the trader will select and execute trades. The two most common methods are discretionary and mechanical, or system-generated. Many traders struggle with discretionary trading because of its inherent flexibility and subjectivity, which provides too much room for emotion-driven decisions. Conversely, others struggle with using purely mechanical, automated systems because of their rigidity and complexity. There is a third option that often is overlooked: Probability-based trading.
With the widespread adoption of spreadsheet applications such as Excel and the proliferation of reliable, intraday data, traders can avoid many of the pitfalls of discretionary and systematic methodologies, while enjoying the advantages of each. The discretionary trader can make decisions based on fundamentals, technicals or a combination of both. He can make trade decisions based on the interpretation of price charts using indicators and price patterns but does not have hard and fast rules based on price action. This approach is appealing because it provides a sense of control that is attractive to many. Though the feeling of control attracts most traders, it is the randomness of success that entraps even the most astute individual.