A setup is only the beginning.

Turn a chart observation into a written plan. Learn six common approaches, when their logic applies, and what would prove the idea wrong.

6 study models · No profitability claims

TrendingFoundation
Trend pullback
Study a temporary retracement within an established trend instead of chasing an extended move.

01 · Market context

For a long setup, mark higher highs and higher lows on H4. On H1, identify a previously defined support area. Reverse the logic for shorts.

02 · Entry confirmation

In this practice model, wait for a completed H1 candle to reject support, then a break above that candle’s high. A touch of the zone alone is not an entry.

03 · Invalidation & stop

The setup fails when the relevant swing low breaks. Place the planned stop beyond that structure, allowing for the instrument’s spread and volatility.

04 · Exit plan

Mark the prior swing high as a possible objective. Compare its distance with the planned loss before entering; skip a setup with too little room after costs.

When to skip

A broken higher-timeframe trend, repeated closes below support, or a major scheduled announcement before the planned entry.

Before moving from study to execution

  1. Choose one model, instrument and timeframe. Write the rules before collecting examples.
  2. Record every qualifying setup, including losses and missed entries. Separate in-sample rule development from testing on unseen periods.
  3. Include spread, commissions, funding and realistic slippage. A price target is not an account return.
  4. Review average win, average loss, drawdown and sample size together. A high win rate alone does not establish an edge.
  5. Use paper trading to check execution. Define position size and maximum acceptable loss before any live order.

These are educational rule sets, not validated FinExpert trading systems or live signals. The timeframe choices and numeric examples are illustrative.

Further reading

Background concepts: Fidelity: support and resistance; Schwab: swing-trade planning; Schwab: order types and execution. The practice rules above are our teaching examples, not endorsements by these sources.

New to chart structure? Start with the foundation guide →