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Trading Setups / Systems


Every trade is born at a specific instance because several factors help form it. This entire gamut of factors is what is summarily called a setup. 

A setup is highly individualistic and systematic. It is too amorphous to be numbered. Simply put, there are infinite trading setups. And follower of one system of setup is often on the other side for the other side. Hence, it is impossible to take a specific view on any trading setup. Trader is best served by trading what his setup shows.

However some general points are well in order

1. Don't second guess the setup

2. Don't front run the setup

3. You may choose not to take the setup or wait for further confirmations

4. All setups need not be traded

5. Somebody else's setup is not our setup, though principle features must be observed, learnt and incorporated

6. There are infinite systems out there, future is better if you take time to develop what suits you best

7. Every setup is wrong once in a while

8. Know the circumstances when your setup are bound to be wrong and illegitimate

9. Don't bounce from setups i.e. don't abandon it / trade unless the exit criteria is triggered.


If you look closely the setup so alike systems, for they are one and the same. Setup as we looked at it here is a subset for the system. The general idea remains same for the whole as well as the parts.

Update: If you are looking at trading system, I would suggest you also read this particular chapter from The :Legend of Bagger Vance

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