If you are a risk-averse trader you should use a strategy with a high winning percentage. This kind of strategy will generate only signals that are highly likely to lead to a winning trade. Learn more on strategies for risk averse traders right here!
On the downside, however, it will generate only few signals, since safe signals are rare. This limits your winning potential: Fewer trades will generate smaller profits.
Chose the right strategies for Risk Averse traders
Here are some great strategies for risk averse traders, that you should be able to trade with a high winning percentage, if you apply them correctly:
1: Trading the market breaking out of a continuation pattern or a reversal pattern with high / low options
Many traders will recognize big patterns like continuation pattern or reversal patterns, and will invest in them.
Therefore, the completion of these formations will lead to a significant breakout that you can trade very securely with high / low options.
2: Trading a trend reversing to its main direction near a trend line with high / low options
In a trend, the market will reverse many times as it approaches the trend line before it eventually breaks through the trend line. All of these reversals could provide you with an opportunity for a winning trade.
Look for candlestick formations indicating a change in price direction or use momentum indicators to detect a weakening movement.
If you choose an appropriate expiration time (two to six bars, depending on the market’s volatility), high / low options could help you win the vast majority of your trades with a strategy like this.
3: Trading the trend breaking through the previous point 2 with high / low options
When the market moves past the previous point 2 in a trend, it will trigger a lot of limit / stop orders that will generate a breakout in the direction of the trend.
You can trade this breakout relatively securely with high / low options.