Who this is for — Traders who enter on «feel» or because «it looks like it's going up». Codifying a setup is the step from gambling to measurable process.
A setup is not an isolated pattern or indicator cross. It is the intersection of independent variables that, aligned in a value area, define an opportunity with testable statistical edge.
In plain terms — Operational checklist: if all mandatory boxes are yes, you may risk; if you must «squint», it is not a setup.
Anatomy (mandatory hierarchy)
| Component | Role |
|---|---|
| Where and why — macro filter | |
| When — execution event | |
| Filters that raise confidence | |
Skipping a level = gamble, not setup.
Binary rules
A tradable setup is described in yes/no, backtestable terms:
Codable example — Long IF: pullback to prior day VAL (context = yes) + CVD bullish divergence (confirmation = yes) + break prior M5 high with volume > average (trigger = yes).
«I buy because it dropped too much» = opinion, not setup.
Typical mistake — Forcing setup with trigger but counter-trend context, justified by FOMO. Or 15 confirmations → paralysis and late entry.
Summary sheet
- What: predefined conditions to take risk.
- Target: 3–4 strong elements, not infinite indicators.
- Tracking: log which setup in journal.
Silver path — Setup module. Index: Silver path.