There have been a lot of articles written about the high probability of winning trades when trading with the trend. Everyone has heard the phrase "the trend is your friend" but does any one know the definition of a trending market? A trending market can be defined as several bars in the same direction. It can further defined as a relationship of where the price is in proximity to the 56 Exponential Moving Average (or any moving average that a trader is comfortable with). Above the 56 EMA, a trader is looking for long trade set-ups, below the 56 EMA; a trader is looking for short set-ups. By not violating this one crucial rule, a trader can keep the winning trade ratio very high. The basic premise behind this concept is that if the market is trending in a particular direction and the trader uses a trading strategy to get into that trend, the results of the trader improves dramatically.

85 to 90% Winning trade Ratio

There are systems out there that claim to have an 85 - 90% winning trade ratio. How do they do that? The ones that I have seen have 2 common traits. The first and probably the most important rule is that they buy into the trend-trading concept. Trading with the trend really does improve trading results. The second trait that most systems that have high winning percentages are that they keep their profit objectives reasonable. The hardest thing for a trader to do is to go for large profits. The market gives a trader those types of returns but they are usually few and far between. Even with the market volatility that we have been seeing, going for the large "out of the park" type of returns will reduce the winning trade ratio. The system that typically looks for "single base hits" will end up doing better in the long run.

System Simplicity

The complexity of the system will also reduce the winning trade ratio. The main reason why most systems that are complex are developed is so that the person who developed the system can charge you a lot of money. Most of those systems or trading plans require the trader to make a large number of discretionary decisions. Every time one of those decisions are made, there is the possibility that a mistake can happen. If, on the other hand, a trader that uses a system that has very few decision points, the better the winning ratio will be.

If you are looking to improve your trading results, look for a trading system or plan that utilizes the "kiss" (keep it simple, stupid) principle and one that uses the "trend as your friend" mind set. Finally, make sure that the profit objectives outlined in the plan are reasonable. By keeping these simple concepts in the forefront of their mind when selecting a trading system, most traders will greatly improve their results.

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This is not a solicitation to buy or sell.There is a risk in any investment!

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