As a trader, I’m always on the lookout for an attractive opportunity. So are you. We want something with low risk and high reward. We want a trade with a good chance of success: a situation where the odds favor the stock moving in one direction over the other.

Remember: you can buy any random stock at any random time with a 50-50 probability of winning. But how is that attractive?

It’s not.

When people ask what I’m looking for as I’m scouring charts, here’s my answer:

“I’m looking for a high odds setup”

Simple as that. I want to find a trading setup I can exploit with confidence that, over the long run, I’m going to win most of the time. That’s what keeps me in the game and what allows me to weather the losing streaks; knowing the odds will eventually shift back in my favor.

Since I know exactly what I’m looking for, all it takes is a quick glance at the chart to determine if there’s a trade to be had. Scanning my watchlist is a quick endeavor because the criteria for each high odds setup I trade is embedded in my head.

A common complaint I hear echoed time and again from rookie traders is how much time they spend searching for trades. Usually it’s because they haven’t defined what exactly they’re looking for. You should have a checklist in your noggin that contains the criteria for each high odds setup you trade. That way, when you analyze the price chart on a security, you can run down the list to see if the pattern in the chart qualifies for a trade.

If you haven’t defined what you’re looking for, how will you know if you find it?

You won’t!

So do it.

Like, now.

Chop chop.

Are you going to trade a bull breakout or bull retracement? How about bearish setups? Will you trade against the trend? If so, when? What indicators/signals are you using that define the setup? Get to the point where you can visualize the pattern and you’ll be able to rip through your watch list in no time.

As for myself, I have a few core chart patterns and implied volatility setups in my trading plan.

That’s pretty much it. I have a core watchlist of stocks, ETFs, and indexes that I scan on a regular basis to see if any high odds setups have cropped up. If so, I pull the trigger. If not, I go play golf.

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