Educational content only. Not financial advice. Markets involve risk. Trade responsibly.
A strategy is only useful when it has: clear market conditions, objective entry, objective invalidation, and fixed risk. Use this as a starting template and adapt after journaling at least 30–50 executions.
Market conditions (when this works best)
Best regime(s): trend / range (depends on strategy).
Avoid: high-chop sessions, major news spikes, illiquid instruments.
Trade only when your checklist is fully satisfied.
Setup rules
Define the setup in one sentence. If you can’t, you’re not ready to trade it live.
Instrument and timeframe rules (stick to them).
Level/zone rules (where the setup is valid).
Confirmation rules (what must happen before entry).
Entry trigger
Trigger should be objective (close, retest hold, structure break).
Avoid entering mid-range or after a single huge candle.
Stop (invalidation)
Stops belong at invalidation. If the stop is too wide, reduce size or skip.
Targets & trade management
Option A: Next resistance/support zone as Target 1.
Option B: Trail after price moves 1R–2R in your favor.
Never widen the stop to ‘give it room’.
Risk rules (non-negotiable)
Risk per trade fixed: 0.25%–1% (choose your template).
Max trades per day: 1–2 for intraday; 1–3 per week per setup for swing.
Max daily loss: stop trading when hit.
Execution checklist
Is market regime suitable?
Is setup near a meaningful zone?
Is trigger confirmed?
Is invalidation defined?
Is position size computed from risk and stop distance?
Is there room to the next zone for reward?
Am I calm and following rules?
FAQ
How many times should I paper trade this before going live?
At least 30–50 executions with honest rules and realistic costs/spreads.
Can I combine this with indicators?
Yes, but treat indicators as context filters—never as the only reason to enter.
What’s the biggest failure point?
Entering too late and violating risk rules. Fix execution before optimizing entries.
Related (internal links)
Position Sizing (1R): /guides/risk-management-trading-position-sizing-1r-drawdowns
Backtesting Guide: /guides/backtesting-avoid-overfitting-fake-results