Study setup ideas if you want to make money | stockbee

6/04/2015

Study setup ideas if you want to make money

If you are a beginner trader , many times you are not sure where to start. You might read books on trading or vist a blog abut trading which might highlight current positions or trades. While that might be useful, if you really want to make money trading you need a complete setup detail.

Setup is a set of conditions used to manage a trade end to end . Setup involves selection of particular kind of stocks to trade. Setup involves entry techniques on those stocks. Setups involves exit techniques on those stocks. Setup involves risk management for those stocks and trades on them. Setup involves the process to follow to identify such stocks and process to manage the trade. In short a good setup idea is like a well written recipe. 

A setup will give you a starting point to model your trading. Most traders start by mimicking someone else's setup. Over period they develop their own setup. For example a Stockbee member took The Stockbee Trend Intensity Breakout setup and started trading it in 2012 and in next 6 to 8 months innovated around it to develop his own unique setup and manage to convert a loss of 200k to 600k profit after taxes and paying back loans in just two and half year. The setup gave him idea and he built his setup around it. Similarly lot of members have use either my setup ideas or other members ideas to develop their own setup.

If you are a new trader of the first thing one should do is to study historical setup ideas developed by other traders.You will be lucky if someone told you that at beginning of your career, most of the time non specific advise is given to beginner trader , further confusing them.

At the beginning of trading career you should look at the entire buffet of setup available to you and then decide which one you want to trade and which one fits your personality, your current capital level, your time commitment and so on. But in reality you will not find a comprehensive guide to all kinds of setup. Most of the time you will stumble in to setup.

A study like that will save you valuable time and capital. You will not be reinventing the wheel. You can build on the success of others.

When you look at historical setups you will find that they broadly fall in two categories:

  1. Position trading setup for longer term traders
  2. Swing trading setups for active traders


Most traders trade a variations of these setups and add unique twist to the mix. Studying these two basic types of setups and then getting in to microscopic details of it will help you become a self sufficient trader who does not have to depend on others for stock picks.

Setup oriented thinking is process based thinking. It is how do I find this kind of stock again and again kind of thinking. It is about ways to catch fish.

Setup selection is key to successful trading. Setup selection allows you to condition your behavior. It allows you to develop your procedural memory. It allows you to automate your thinking.

When it comes to setup selection your time frame is very critical. A setup that is good for day trader may not be good for swing trader. A swing trading setup may be extended setup for position trader.

If you want to make money trading and not rely on picks from others, invest your time and effort in study of setups.

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