What should a well defined setup tell you

You have a choice of setups to trade. Setup is complete set of conditions involved in trading a particular method.

A well defined setup will tell you :

  • what kind of stock or etf or instrument  to buy
  • why
  • where to buy it
  • how much to buy
  • where to put stops
  • where to exit
  • what kind of profit can you expect with this kind of setup
  • how many trades can you expect with this setup
  • what overall market conditions favor this setup 
  • When should you not trade this setup
  • when should you risk less or more
If you have a well defined setup idea you should be able to replicate another persons trade on your own. 

If you are a beginner trader what you need most is a complete setup idea and template with detailed process flow and steps. If you find that early in your trading career it will save you time . money and frustration.

As a trader you have a big choice of setup ideas. There are hundreds of setup ideas in public domain. If you exhaustively study the books written by traders or about traders, read blogs written by traders and do some research you will come across hundreds of setup ideas. 

Some of them are explained in detail and all details to trade them can be found if you dig a bit. In fact life for new trader is much easier today due to internet. Everything is available in public domain. 

It is a different issue that as a beginning or struggling trader you may not even understand the importance of setup or a complete setup. 

If you are a Stockbee blog reader you will see that my day in and day our focus is on trading specific setup. And if you are motivated enough and go through last six months of posts you will find all kinds of details to trade my kind of setups. It is all detailed here.

There are setup I currently trade. And all of those are detailed on this site and you will see several trading blogs trading similar or variation of those setups. Many trading blogger are Stockbee members or were members at some stage and now trade some of those setup ideas or have developed own setup.

There are setup ideas I have discussed here but do not actively trade. Does not mean those set up do not work but for practical reason I focus only on few setups. If you go through posts in sidebar you will see many examples of that. All of those setups work.

Besides the setups I trade I know of  lot of them because of the Stockbee members site. There are many setups discussed by members that they trade,  you will find at least 40 to 50 setup ideas traded by members discussed in detail and some share their trade real time.

there are some setup ideas that produce big winners. Episodic Pivots is one such setup idea. It finds big winners of 100% plus kind magnitude. But it trades infrequently as those kind of setups do not show up everyday. Trading a setup like EP requires you to understand that  and accordingly be very selective.

Swing trading  setup ideas  produce frequent but small profit. The Momentum Burst kind of setups I trade is one of those kind of setup. It produces hundreds of trades. Advantage of setups like that is it allows you to profit with very little drawdown.

Setup ideas should not be a problem for you if you are a beginning trader or struggling trader. What you might find difficult to find is detailed step by step process flow to make them work. But that problem is also not a serious problem if you are motivated trader.

The problem is not lack of setup ideas. The problem is lack of skills and fluency and confidence in trading them . Setup ideas work when you spend sufficient time  developing skills to trade those setups and becoming proficient at them.

If you are a new or struggling trader hunt for detailed setup ideas and templates.

Methods and philosophy

No comments: