Pending Sell On EURNZD H1

EURNZD H1

A nice short setup just occurred on EURNZD H1. Downtrend, demand engulfed, very distinct supply zone with strong departure (signifying a huge order imbalance there) for entry and clear S/R flip level for target. Just want to share what goes on in my mind with this concept of trading. We know that trading is a probability game and expectancy is what matters. This trade if successful would yield approx 3R. If I lose, I lose 1R. I only need to be right 25% of the time to break even. Do you think shorting such a nice supply zone in a downtrend with clear space below has at least a 25% chance of working out? If so, take the trade.

This is the way I'm approaching every single trade now, measuring the reward-risk vs the probability of the trade working out. With regards to the above setup, I would say it should have at least a 65-75% chance of being successful. There is no reason not to take the trade! I used to be very uncomfortable with limit orders and preferred to wait for candlestick confirmation. However I realized that while waiting for candlestick confirmation might result in a slightly better hit rate, it greatly reduces the reward-risk ratio of the trade and hence my overall expectancy, especially if the candle is a big ass one. However this is definitely an issue of preference as I do know some really good candlestick traders too.

The fact that price moves from zone to zone is one of the best kept secrets in trading. It gives confidence in entering at the point with the lowest risk and holding to the next opposing zone.

With regards to the above trade, I'll only cancel it if 1) Price doesn't trigger me and goes on to hit my target
2) Price starts making higher lows on the way to my entry, signifying a possible trend change 3) I'm not in the trade by NFP tomorrow. I don't trade before NFPs, and with the Syria issue looming I'll certainly prefer not to hold trades over the week end.