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Finding High-Probability Trades

Once you understand the individual analytical tools, the next step is learning how to combine them systematically to identify high-probability trading opportunities. This guide provides a structured approach to trade selection using the Forex Fundamentals platform.

The Confluence Framework​

High-probability trades occur when multiple independent factors align in the same direction. Think of each analytical tool as a filter—the more filters a trade passes through, the higher its probability of success.

Essential vs. Supplementary Analysis​

To identify high-probability trades, you need to distinguish between essential and supplementary factors:

Essential Factors (Required for every trade)​

  1. ✅ Cross-Pair Score - Currency Scoreboard shows clear directional bias
  2. ✅ News Sentiment OR Market Sentiment - At least one must support your bias
  3. ✅ Economic Calendar - No major high-impact events imminent

Supplementary Factors (Add confidence but not required)​

  1. ⭐ Balance of Payments - Confirms fundamental direction
  2. ⭐ Intrinsic Analysis - Provides deeper understanding of currency strength
  3. ⭐ COT Positioning - Shows institutional alignment
  4. ⭐ Swap Rates - Favorable carry enhances the trade
  5. ⭐ Market Sentiment - If not already checked as essential factor

Reality Check: All 3 essential factors should be satisfied. Supplementary factors add confidence and can help prioritize between multiple opportunities, but a trade can be taken with essentials alone.

Systematic Trade Finding Workflow​

Step 1: Scan the Currency Scoreboard (5 minutes)​

Start by opening the Currency Scoreboard - this is your primary trade discovery tool:

Visual Heatmap Scan​

  1. Look for intensity - Dark green (strong bullish) or dark red (strong bearish)
  2. Check for clusters - If multiple pairs with the same base currency are green, that currency is likely fundamentally strong
  3. Note outliers - Pairs that contradict the overall pattern might signal special situations

Detailed Table Analysis​

Sort the table by Cross-Pair Score (highest to lowest):

For Bullish Trades (Long opportunities):

  • Look for positive scores showing bullish bias
  • Check Balance of Payments: Bullish signal adds confidence (supplementary)
  • Review Swap: Positive swap is a bonus (supplementary)

For Bearish Trades (Short opportunities):

  • Look for negative scores showing bearish bias
  • Check Balance of Payments: Bearish signal adds confidence (supplementary)
  • Review Swap: Keep in mind swap costs on short positions (supplementary)

Shortlist 3-5 pairs that show strong Cross-Pair Scores.

Step 2: Verify News or Market Sentiment (3 minutes per pair)​

You must check at least one of these (ideally both) for each shortlisted pair:

Option A: News Sentiment (via Cross-Pair Analysis)​

Navigate to the Cross-Pair Analysis page:

  • Are recent articles bullish or bearish on each currency?
  • Any breaking news that contradicts your fundamental bias?
  • Does the news sentiment support your directional bias?

Verdict: ✅ If news supports your trade direction, continue. ❌ If news contradicts, reconsider the trade.

Option B: Market Sentiment (via Risk Sentiment)​

Check Market Sentiment to see the overall risk environment:

Current Market Sentiment: +72 (Risk-On)

Risk-On Environment (Positive score):

  • Favor: AUD, NZD, CAD, NOK
  • Against: JPY, CHF, USD (to some extent)

Risk-Off Environment (Negative score):

  • Favor: JPY, CHF, USD
  • Against: AUD, NZD, CAD, NOK

Neutral (Around zero):

  • Less relevant; focus more on news sentiment and intrinsic factors

Verdict: ✅ If your pair aligns with risk sentiment (e.g., AUD/JPY long in Risk-On), continue.

Step 3: Check the Economic Calendar (2 minutes)​

Check the Economic Calendar for the next 48-72 hours:

High-Impact Events to Avoid:​

  • Central Bank Meetings (interest rate decisions, policy statements)
  • Employment Reports (NFP, unemployment rate)
  • Inflation Data (CPI, PPI)
  • GDP Releases

Decision Rules:

  • ✅ Safe to Enter: No high-impact events for 48+ hours
  • ⚠️ Proceed with Caution: Medium-impact events only
  • ❌ Wait: High-impact event within 24 hours

Supplementary Analysis (Optional)​

Once you've verified all 4 essential factors, you can add supplementary analysis to increase confidence:

Intrinsic Analysis (5 minutes per pair)​

Check Intrinsic Analysis to understand the deeper fundamental picture:

Example: AUD/JPY​

AUD Analysis:

  • Current Score: -18 (deflationary pressure → strengthening)
  • Trend: Score declining from -5 to -18 over past month
  • Interpretation: Australian economy showing strength, RBA may maintain hawkish stance

JPY Analysis:

  • Current Score: +22 (inflationary pressure → weakening)
  • Trend: Score rising from +10 to +22 over past month
  • Interpretation: Japanese economy facing inflation, BOJ may be slow to tighten

Verdict: ✅ Strong divergence adds confidence to the trade.

COT Positioning (3 minutes per pair)​

Visit COT Positioning to check institutional alignment:

Ideal Scenario:

  • Your bullish bias + Institutional traders are long (or building longs)
  • Your bearish bias + Institutional traders are short (or building shorts)

Example:

AUD/JPY - COT Data
Net Positioning: +25,000 contracts (bullish)
Weekly Change: +5,000 (increasing bullish bets)
Percentile: 65th (room to go higher)

Verdict: ✅ Institutions are aligned with our bullish fundamental view.

Warning Signs:

  • Percentile > 90th: Heavily long (potential reversal risk)
  • Percentile < 10th: Heavily short (potential reversal risk)

Balance of Payments​

Already visible on the Currency Scoreboard. BOP signals provide additional confirmation of fundamental direction but are not required for trade entry.

Swap Rates​

Already visible on the Currency Scoreboard. Positive swap is a bonus for longer-term holds but not required for trade entry.

Final Trade Selection​

Create a simple scorecard for each pair, focusing first on essentials:

CriteriaAUD/JPYNZD/CHFCAD/JPY
ESSENTIALS
Cross-Pair Score✅ Strong (+75)✅ Strong (+68)✅ Moderate (+52)
News/Market Sentiment✅⚠️ (Mixed)✅
Clear Event Window✅✅❌ (CPI tomorrow)
Essential Score3/32/32/3
SUPPLEMENTARY
Balance of Payments✅✅✅
Intrinsic Divergence✅✅⚠️
COT Alignment✅✅⚠️
Positive Carry✅❌✅
Market Sentiment✅⚠️✅
Supplementary Score5/53/53/5
TOTAL8/85/85/8

Priority Order:

  1. AUD/JPY - Perfect setup with all essentials + all supplementary factors. Trade immediately when price action confirms.
  2. NZD/CHF - Good setup but mixed sentiment weakens confidence. Consider waiting for clearer sentiment alignment.
  3. CAD/JPY - Wait until after CPI release tomorrow before considering.

Key Insight: AUD/JPY satisfies all 3 essential factors with strong supplementary confirmation. NZD/CHF has mixed sentiment which weakens one essential factor. CAD/JPY fails the calendar check (essential), so it's not tradeable yet.

Real-World Trade Examples​

Example 1: High-Confidence Long Setup​

Pair: AUD/JPY
Direction: Long (Buy AUD, Sell JPY)
Date: February 15, 2025

Essential Factors:

  • Cross-Pair Score: +82 (Strong bullish) ✅
  • News Sentiment: Positive Australian employment data, Japan struggling with inflation ✅
  • Calendar: No major events for 5 days ✅

Supplementary Factors:

  • Balance of Payments: Bullish signal ✅
  • Intrinsic: AUD -20 (strong), JPY +25 (weak) ✅
  • COT: Institutions 70th percentile long, increasing ✅
  • Swap: +2.8 (positive carry) ✅
  • Market Sentiment: +78 (Strong Risk-On, aligns perfectly) ✅

Score: 3/3 Essentials + 5/5 Supplementary = 8/8 - Exceptional setup

Price Action Trigger: Wait for pullback to 92.50 support, look for bullish reversal candle

Risk Management:

  • Entry: 92.60 (on bounce from support)
  • Stop Loss: 91.80 (below support zone)
  • Take Profit: 95.50 (previous resistance)
  • Risk/Reward: 3.6:1

Example 2: Valid Setup with Essential Factors Met​

Pair: EUR/GBP
Direction: Short (Sell EUR, Buy GBP)
Date: March 8, 2025

Essential Factors:

  • Cross-Pair Score: -65 (Strong bearish) ✅
  • News Sentiment: GBP positive on BoE hawkish hints, EUR weak on ECB dovish stance ✅
  • Calendar: UK GDP data in 2 days ⚠️ (Medium impact, not ideal but acceptable)

Supplementary Factors:

  • Balance of Payments: Bearish signal ✅
  • Intrinsic: EUR +18 (weak), GBP -12 (strong) ✅
  • COT: Institutions 45th percentile (neutral) ⚠️
  • Swap: -0.5 (negative carry) ❌
  • Market Sentiment: -15 (Neutral) - Not heavily risk-correlated pair, so neutral is fine ⚠️

Score: 2.5/3 Essentials + 2.5/5 Supplementary = 5/8

Decision:

  • Valid trade - All critical essentials are satisfied
  • Consider smaller position size (75% of usual) due to upcoming GDP
  • Negative swap means avoid holding long-term
  • Be prepared to exit before UK GDP if not in profit
  • This demonstrates that supplementary factors add confidence but aren't required

Example 3: Avoid This Trade - Essential Factors Not Met​

Pair: USD/CAD
Direction: Appears bearish on scoreboard
Date: April 12, 2025

Essential Factors:

  • Cross-Pair Score: -45 (Weak bearish) ⚠️
  • News Sentiment: Mixed - Oil prices falling contradicts CAD strength ❌
  • Calendar: FOMC meeting tomorrow ❌ (High impact event)

Supplementary Factors:

  • Balance of Payments: Neutral ⚠️
  • Intrinsic: USD +5, CAD -8 ⚠️ (Mild divergence)
  • COT: Institutions 92nd percentile long USD/CAD ❌ (Extreme positioning - reversal risk)
  • Swap: -1.2 ❌
  • Market Sentiment: +82 (Risk-On) ⚠️ (CAD should be strong, contradicts short bias)

Score: 1/3 Essentials + 0/5 Supplementary = 1/8 - Poor setup

Decision: ❌ DO NOT TRADE

  • Missing critical essentials - News contradicts bias, major event imminent
  • Even perfect supplementary factors couldn't save this trade
  • This demonstrates the importance of satisfying essential factors first

Advanced Pattern Recognition​

Pattern 1: The Fundamental Momentum Trade​

Characteristics:

  • Cross-Pair Score has been rising/falling steadily for 2-3 weeks
  • Intrinsic scores showing consistent divergence
  • COT data showing institutions building positions in the same direction
  • News sentiment increasingly aligned

Strategy: These are trend-following trades with strong momentum. Enter on pullbacks, use wider stops, aim for larger targets.

Pattern 2: The Sentiment Reversal Trade​

Characteristics:

  • Market Sentiment shows recent shift (e.g., from Risk-Off to Risk-On)
  • Intrinsic fundamentals support the new sentiment direction
  • COT data shows early signs of institutional repositioning
  • News sentiment beginning to shift

Strategy: Early-stage trades. Higher risk but excellent reward potential. Enter with smaller size, scale in as conviction builds.

Pattern 3: The Carry Trade Opportunity​

Characteristics:

  • Strong positive swap (above 2.0)
  • Cross-Pair Score moderately strong (+40 to +60)
  • Market Sentiment stable (not extreme)
  • Low volatility environment
  • No major events on calendar

Strategy: Longer-term hold. Focus on accumulating positive carry. Less concerned with perfect timing. Use wider stops, scale in on dips.

Common Trade Selection Mistakes​

Mistake 1: Skipping Essential Factors​

The Trap: "The Cross-Pair Score is great, I don't need to check anything else."

The Reality: You might enter right before a major news event or against strong news sentiment, leading to immediate losses.

Solution: Always verify all 3 essential factors:

  1. Cross-Pair Score
  2. News OR Market Sentiment
  3. Economic Calendar

Mistake 2: Over-Relying on Supplementary Factors​

The Trap: "COT shows institutional longs and Intrinsic divergence is perfect, so I'll trade despite the weak Cross-Pair Score."

The Reality: Supplementary factors can't override poor essential factors. If essentials aren't satisfied, don't trade.

Solution: Essentials first, always. Use supplementary factors only to choose between multiple valid setups.

Mistake 3: Paralysis by Analysis​

The Trap: "I need to check Intrinsic, COT, every news article, and all sentiment data before I trade."

The Reality: You'll miss opportunities by over-analyzing. Essential factors are sufficient for a valid trade.

Solution: If all 3 essentials are satisfied, you have a valid trade. Supplementary factors can help prioritize but aren't required.

Mistake 4: Neglecting Technical Analysis​

The Trap: "All 3 essentials are satisfied, so I'll enter at market price immediately."

The Reality: You might enter right before a technical pullback and face unnecessary drawdown.

Solution: Use fundamentals for direction, technicals for timing. Wait for pullbacks, support bounces, or breakouts.

Quick Reference: Minimum Viable Trade​

If you're short on time, here's the essential-only analysis workflow:

The 10-Minute Essential Checklist​

  1. Scan Currency Scoreboard (3 minutes)

    • Sort by Cross-Pair Score
    • Identify pairs with clear directional bias (positive or negative scores)
    • Check Balance of Payments column for confirmation (supplementary)

  2. Verify News OR Market Sentiment (3 minutes)

    • Quick check of Cross-Pair Analysis news feed, OR
    • Quick check of Risk Sentiment page
    • Ensure no major contradictions to your bias

  3. Check Economic Calendar (2 minutes)

    • Look at next 48 hours
    • Ensure no high-impact events

  4. Wait for Technical Entry Signal (2 minutes)

    • Support/resistance levels
    • Candlestick patterns
    • Entry confirmation

Total Time: ~10 minutes for essential fundamentals + technical confirmation

What You're Skipping:

  • Intrinsic Analysis (nice to have)
  • COT Positioning (adds confidence)
  • Swap analysis (relevant for long-term holds)
  • Deep-dive news analysis

Result: A fundamentally sound trade with all essential factors covered. You won't have maximum confidence, but you'll avoid major mistakes and stay aligned with fundamental forces.

Next Steps​

Now that you know how to find high-probability trades, learn how to manage them properly:

Remember: Finding great trades is only half the battle. Proper execution and risk management are what separate consistently profitable traders from everyone else.