Hi guys - as part of my ongoing quest to fill my trading knowledge gaps, one of the things on my to do list is the process of categorising my past and future trades into Setups.

The main reason to do so is to start measuring more objectively which specific setups work best and which don't, as opposed to currently having just a long bunch of trades some of which are winners and some are losers.

I was inspired to follow this approach by one of the excellent @DionysusToast's videos he has on his website (the specific video is called "Introducing Order Flow to Your Trading" in case you ask)


I have a feeling that I am probably going to open a can of worm but here goes:

Q1 I have identified the following setups. Do you think they are reasonable categorisations?

1. TREND FOLLOWING - enter at either measured pullbacks or where a liquidity vacuum ends
   
2. BREAKOUT - enter after price has broken out of a range
   
3. PRE-BREAKOUT - enter before price has broken out of a range but there's indication it will break
   
4. RANGE - fade the extremes of the range
   
5. SCALP - (in this case defined as aiming to take 3-5 tick profits)
   
6. FADE / REVERSAL - the permafader - 'hero' trade type

Q2 I accept that going backwards and trying to fit the above setups into all my past trades can be challenging, as sometimes why I took a trade wouldn't have been this clear - Because of this consideration do you reckon it's better if I forget applying the above to past trades and do it only from now on?

Note: even if people agree that the above setups are pretty much okay, that does not necessarily mean I am going to take all of them in the future.

I also accept that a) there may be 'variations on a theme' regarding the above setups b) multiple setup opportunities may develop during one session c) some setups may be more suited to one market than another


With the above I merely want to attempt to identify a fairly rough number of setups and ensure I have not missed anything obvious.


Views around the table appreciated.

Interesting stuff.

I would look not just for how well they work but:
- under which conditions they work well
- what supporting information makes them work better

From that perspective, I'd look at 2 specific, opposing types of trade:
Pre-Breakout
Trend Following

The reason for that:
Pre-Breakout requires overall rangebound behavior in the short term. It's also a tricky bugger of a trade. It's a trade that needs good timing and one you need to get out of quickly if you are wrong. But you do get indications that the range will break which is the "supporting information".

The Trend following trade obviously requires different conditions and also it's a trade that can be left time to work out. So the supporting information comes over time and is very different.

So there you'd have 2 very, very different trades from both when they work and how to spot them

Other people might have other factors for you to consider too - this is just my 2c.

I have done exactly what you described a while back when I log my trades in Excel. I was doing this because I'm still a relatively new trader and I want to build a systematic process of identifying/testing new setups I see.

For the trade log for each individual trade, I added almost exactly same setups categories as your list. on top of that I identify the entry price reasoning e.g. MA, Bollinger VWAP etc, and exit reasoning eg technical levels, price flows or change inter market correlations . Next I added a category for how I size the trade, all in all out, scale in scale out or all in scale out. I also have a yes/no column for whether I stuck to my plan or not. I Finally i put in the MFE and MAE along with realized profit for the trade.

At the end of the month, I will make a pivot chart out of all the data I collected and evaluate how each set up perform given I stuck to my plan for those setups.

Sometimes these categories are not comprehensive enough to complete define my trade ideas/setups. One of the reason is that I found it too difficult to document the context for each market at the moment of the trade. I could only try my best to fit the ideas into the categories.


I believe it is really helpful. But for me personally, this exercise helped me to better understand trading perspectives rather than what each setups are doing. Interestingly I found this helped me to stick to my plan as I wanted a YES tick for not stick to the plan column in order to get good "data" for the log.

Hmm...well at a very 'meta' level, it appears all of the trade categories you have created are 'directional' strategies in nature. So you may want to consider other strategy types all together, e.g. spreads, delta neutral volatility strategies, carry trades, etc.

But from a purely directional stand point, I think the labels seems sufficient after you add DionysusToast's "pre-breakout" classification.

top ten trading setups
Top Ten Futures Daytrading Setups - Shadow Trader

--------
TRADE TYPES – All opportunities must be able to be quantified by being one of the following.

1. Fade extreme of value area if from a starting point within value area
• Internals should be mixed or not in trending mode and tempo should be relatively slow.
• Odds of success increase if there is already some value built within the value area and the market breaks towards an extreme later in session.
• Odds of success decrease if market breaks towards VA extreme early.
• Market internals show the underlying strength or weakness of any particular move and define the odds of that move continuing through the next inflection point or rejecting or stalling.

2. Buy the high or sell the low of value area if starting outside of value area
• Internals should be positive if buying, negative if selling.
• It should be apparent that internals and tempo do not support a larger move into the prior day’s value.
• The market wants to reject balance and establish value elsewhere.

3. Buy the breakout from the value area if starting inside of value area
• Internals must be positive if buying and negative if selling
• There must be small countermove upon first touch of VAH or VAL to build pressure.
• Do not buy a “coming up from bottom” or “coming down from top”

4. Fade opening gap when ONL or ONH fails to get taken in opening drive
• Gap must be less than 10 points /ES.
• Overnight inventory must be at least 90% or > net long or short.
• Odds of success increase if prior days structure does not support prior strong or weak settle and gap is just adding to imbalance.
• Trade location must be close enough to ONL or ONH to allow for proper risk – reward ratio.
• Internals should not be indicative of indicative of ignoring overnight inventory, especially $TICK
• Targets should be in stages. Prior high/low, VAH/VAL, POC

5. Pattern based continuation or reversal trade according to 5/15 candlestick chart
• Trend line using 24 hour or RTH.
• Consolidation breakout from tight range
• Buyers or sellers shut off pattern
• Favor setups that are outside of balance but can be taken inside VA if apparent that the game is to get all the way to other extreme of the VA.

6. Larger directional bounce or retracement driven from larger timeframes such as daily
• Day timeframe guidelines do not apply.
• Best trade will fly in the face of current market activity
• Enter first on limit order and manage later.
• Better if at major support or resistance or swing high/swing low

7. Buy or sell move to VPOC or HVN
• Look for VPOC or HVN as end point for larger directional move that has already been underway for some time.

8. Fade R3’s and S3’s
• Market may be moving with huge increase in momentum and tempo to this level, thus use tight stop.
• RORO – “Right or Right Out” .
• If range of prior day is compressed, then odds are weaker of rejection at this level.

9. Buy highs or sell lows if developing profile is incomplete
• Target is same distance as from end of value to end of excess on opposite side of range.
• Tempo and internals must be showing a building of pressure below poor high or above poor low.
• Acceptance should have already occurred around this area in terms of volume and TPO’s.

10. Buy or sell 80% rule trade
• Trade location is imperative.
• Look for move back into value that holds value without falling back out.
• Stop is always below/above last pullback/retracement after entering VA first time.

Hi guys - as part of my ongoing quest to fill my trading knowledge gaps, one of the things on my to do list is the process of categorising my past and future trades into Setups.

The main reason to do so is to start measuring more objectively which specific setups work best and which don't, as opposed to currently having just a long bunch of trades some of which are winners and some are losers.

I was inspired to follow this approach by one of the excellent @DionysusToast's videos he has on his website (the specific video is called "Introducing Order Flow to Your Trading" in case you ask)


I have a feeling that I am probably going to open a can of worm but here goes:

Q1 I have identified the following setups. Do you think they are reasonable categorisations?

1. TREND FOLLOWING - enter at either measured pullbacks or where a liquidity vacuum ends
   
2. BREAKOUT - enter after price has broken out of a range
   
3. PRE-BREAKOUT - enter before price has broken out of a range but there's indication it will break
   
4. RANGE - fade the extremes of the range
   
5. SCALP - (in this case defined as aiming to take 3-5 tick profits)
   
6. FADE / REVERSAL - the permafader - 'hero' trade type

Q2 I accept that going backwards and trying to fit the above setups into all my past trades can be challenging, as sometimes why I took a trade wouldn't have been this clear - Because of this consideration do you reckon it's better if I forget applying the above to past trades and do it only from now on?

Note: even if people agree that the above setups are pretty much okay, that does not necessarily mean I am going to take all of them in the future.

I also accept that a) there may be 'variations on a theme' regarding the above setups b) multiple setup opportunities may develop during one session c) some setups may be more suited to one market than another


With the above I merely want to attempt to identify a fairly rough number of setups and ensure I have not missed anything obvious.


Views around the table appreciated.