Anticipating is preparation for both outcomes, good or bad. Calculating how much to lose just as important as how much to expect to win. This means the trader will identify in the chart where he’ll see the entry point and two exit points (stop loss and profit target). By having this method, he can identify his risk-to-reward ratio as well as the probability of the success of the trade.

So how do we overcome this dilemma? Probabilities can be made found through rigorous testing historical data based on strategies that the trader plans to trade with them. Finding statistics to back his notion that the strategy works will give him confidence in approaching the market and give the mindset to anticipate and not predict the outcomes.  One way is the see the market as it is showing us either by the price action or by indicator.

Recognize that prices or indicator can change direction at anytime. By using statistics to make an educated guess, the trader can find which direction the market will likely go. But probability cannot guarantee the desired outcome. This means a backup plan must be in place, i.e. a stop loss, in case that desired outcome doesn’t happen. This is the reason why successful traders have stop loss in place. A stop loss is a deciding factor that determines if the outcome has worked or not. The trader must accept that the market will always be right and trying to be right will prevent the trader from being one with the market and go with the flow.