This means that nothing is totally certain so if you want to save yourself from losing all of your money you have to increase the levels of certainty by as much as possible. Many people think that this is done through risk management and nothing more but they are in my opinion wrong.

 There are several ways aside from your risk management to increase the levels of certainty in your trading to such that you are prepared to risk your own hard earned money on the outcome. One of the main ways is through your trading edge which is also called a variety of things including a system or a plan etc…

Your edge should give you a high probability of making money after a sustained period of trading. Take note of that definition.

 With the methods that I teach here on the site there are several ways to increase the probability of your trading within your edge. One such example I will use is that of determining the overall direction of the market.

You may have a nice trade plan all set up and you may decide that you are going to just use the 4 hour market flow and the daily buying / selling zones as confirmation for your direction which of course is fine because you have a confluence of good reasons to be trading in a particular direction.

 However there are several ways to make these set ups much higher probability, to do this you could have the daily market flow agreeing with the 4 hour market flow as a double reason to trade a certain direction. On top of this you could trade in line with the price action on the lower timeframes as confirmation of this overall direction, for example look at the price action on the 1 hour or 15 minute charts are the successions of highs and lows supporting your proposed direction?… if so great, if not maybe stay out.

 The moral of this exercise is to reinforce to you that the object of trading is not to take lots of trades rather the object of trading is to take high probability trades, so if you can see a way to increase the probability of your trades then do it! You will see the benefits of this practice in just a few trades time.

Perhaps you have found ways to make your trades higher in probability? If you have please reply here, I’d love to hear about them!