How to assign probabilities to your trades

Q: How do you assign a probability of success to a trade?

Answer?

You stack evidence.

Each piece of information nudges the odds up or down.

Let’s get right into an example:

Say you’re in a bull market, and the daily is in an uptrend.

Now, before any more info, you might say…

“Longs probably have a slight edge here…Call it 55%.”

Then, new information starts to arrive:

• Yesterday bounced off support, reversed, and closed at intraday highs: + 10%
• Overnight session tried to break higher but rotated back to open at VWAP: – 5%
• At the open, price flushed, trapped sellers, and ripped back to highs: +10%

Now your updated belief might be:

“Given everything I’ve seen, longs feel like a high probability here, maybe 70%”

And that’s not because you know it’ll work. But because the case has been built…

You’re never thinking in yes/no terms, and you’re constantly updating your view as the market reveals more. (With some information carrying more weight than others.)

This is why screen time matters. It’s how you learn to weigh context…

And we never know for sure, right?

We’re only ever making an educated guess.

Just like we do with our RvR estimates. (The probability of hitting your target isn’t the same as just being directionally right.)

Worth keeping in mind this week.

Thinking in probabilities helps smooth out the noise when everything is coming at you at once.