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Forex Strategy Video: Potential vs Probability for S&P 500, GBPUSD

Forex Strategy Video: Potential vs Probability for S&P 500, GBPUSD

2013-09-20 01:08:00
John Kicklighter, Chief Strategist
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Talking Points:

• 'Potential' and 'probability' are considered interchangible terms, but not for traders

• Probability is the likelihood of moving a direction, potential is just how far it could move

• We use the S&P 500 to illustrate the difference and measure the risks/opportunity of reversal

Sign up for John’s email distribution list, here.

While in a literary sense the terms 'potential' and 'probability' are similar, for traders they are anything but. The difference between these trading concepts highlight an incredible difference in trade conditions for the S&P 500. In today's Forex Strategy video, we use this benchmark equity index to describe why the dominant, four-year trend presents a clear bias; but the lower proability reversal offers a far more lucrative payout. We discuss the very elemental concept of greater return for accepting higher risk and show how you can use this same assessment for EURUSD, GBPUSD, AUDUSD and any other trade you come across.

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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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