2006issue C111-4
Beyond setups: a six-factor trading process
The archive treats setups as incomplete and names six operating factors around market state, exits, a multi-system toolbox, review, focus, and patience. An editorial reading puts market-regime first on the pre-trade checklist and requires a written leave plan before any entry.
- The archive treats setups as incomplete and names six operating factors: trading with the market, exit design, multiple strategies, learning from mistakes, focus, and patience.
- Market-regime is read as an uptrend, downtrend, or base, and NASDAQ is watched because it often leads other indexes.
- No position is opened without a defined exit; risk is set by size and a pattern-failure-stop, with a two- or three-day time-stop when the market is not strongly trending.
- Editorial reading: consecutive losses should open a trade-review-checklist, not a search for a system that never fails.
Setups are not a complete process
The archive treats setups as incomplete. The operating factors named are trading with the market, exit design, multiple strategies, learning from mistakes, and focus, with patience added as a sixth.
Trading skill is described as taking two to five years to develop, with few shortcuts if the work is done alone. Those factors are presented as the operating process around any setup, not as optional comments after a signal fires.
Three market states decide which setups are allowed
Market behavior is classified into three states: trending up, trending down, and basing. That reading is the market-regime used to decide which setups are allowed. NASDAQ is monitored on the grounds that it often leads other indexes.
While price holds above an ascending trendline, long setups are the stated focus. A break is treated as uncertainty that calls for smaller size and shorter-horizon techniques until a lower low confirms a descending-trendline short regime or a base forms.
A narrow-base that swings from top to bottom in fewer than four days is treated as too brief for swing trades. A wide-base is used for longs off the low and shorts off the high, with exits as price approaches the opposite side.
Write the leave plan before entry
A position is not to be opened unless the exit trigger is already defined. A pattern-failure-stop is placed where the setup pattern fails, typically just under the setup low. Position size, not an arbitrary percentage of entry, is used to control risk.
In a strong trend, holds may last longer and exits may follow trendline breaks, climax extension, or declining-volume continuation. When the market is not strongly trending, backtests across several systems are said to favor a two- or three-day time-stop because first moves often fade into a retest.
A mapped trading-toolbox
The minimum trading-toolbox specified is four well-tested systems, two for longs and two for shorts. They are to be built on distinct ideas and evaluated across market types, filters, and holding periods, so each procedure is mapped to the conditions in which it may be used.
A fixed trade-review-checklist
After-the-fact review is framed as a trade-review-checklist: setup strength, volume behavior, whether entry was chased, planned target and stop, contemporaneous market behavior, NASDAQ support and resistance, remaining room, and whether the trade aligned with the market.
Focus is defined as using known tools only in favorable conditions, treating results as probabilities rather than a contest to be right, following charts instead of outside opinion, and reviewing rule adherence when the account declines. That stance is process-focus: each outcome is one observation from a tested procedure, not a verdict on whether the trader was right. Patience is named as the sixth operating factor.
All readings on this track · 35 readings
- 2001Swing trading with trailing stops and fixed loss exits
- 2003Linear regression swing alerts and trailing stops
- 2005Range-width gates for swing entries at base edges
- 2006Beyond setups: a six-factor trading process
- 2007Angle of ascent, chart scale, and style-fit
- 2010Stacking a short-horizon oscillator with a moving average and swing hold rules
- 2010A weekly contest long treated as one swing procedure
- 2011Four-color volume-price states for long-only swing actions
- 2012Classify momentum, velocity, or volatility before the swing signal
- 2013Swing rules as a portable entry and exit procedure
- 2013Constructing paired percent-b and stochastic swing oscillators
- 2013Give the fast band line and the slow stochastic complementary jobs
- 2013Smoothed percent-b divergences for numbered swing-wave rules
- 2013Portable swing rules for candle turns and a 1-2-3 wave count
- 2013A three-average swing and breakout case study
- 2013Constructing swing trades with a fifty-day average and a five-bar exponential average
- 2014From aliasing and dilation to a roofed stochastic swing
- 2014Channel width and trend-filter lookback as separate swing-trading choices
- 2016Constructing volume-confirmed multiday breakout swings
- 2017Constructing swing signals from a volume-weighted average cross
- 2017Golden-cross swing entry with a trailing-stop exit
- 2017One swing procedure: group leadership first, then a volume-price leave
- 2017Four-day green-candle breakout entry as one swing procedure
- 2017Swing pivots need a 100-period crossover and a breakout candle
- 2017Supply and demand zones as bounded swing maps
- 2018Three-bar volume-confirmed swing breakout
- 2018Tight stops first on swing breakouts with a range filter
- 2018Constructing trend and swing rules from horizon to crossover
- 2019Decade-level breakouts as one closed swing procedure
- 2019Inverse-pair swing trading with a shared buy-stop
- 2019Week-range next-day breakout on bitcoin pairs
- 2019Ranking strength before confirming a multi-timeframe breakout
- 2019Forty-five-degree multi-week swing breakout as a closed procedure
- 2020A dual pending-stop pair as one bitcoin swing construction
- 2020High-low activator, directional oscillator, and momentum swing agreement