How many set-ups do you use ?

This is a discussion on How many set-ups do you use ? within the Discretionary Trading forums, part of the Methods category; I have been day-trading NASDAQ stocks for the past 18 months or so and I have considered this period to ...

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Old Nov 28, 2004, 9:25pm   #1
Salty Gibbon's Avatar
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How many set-ups do you use ?

I have been day-trading NASDAQ stocks for the past 18 months or so and I have considered this period to be one of education and experimentation.

Thankfully my capital pot today is greater than when I started so I would say that my learning phase has been successful.

I have now been trading profitably on a consistent basis for 6 or 7 weeks so I am at the point where I would say my experimentation and initial education phase is at an end.

It is now time to progress to the next phase of being a serious professional trader and consequently I am now beginning to put together a proper trading / business plan which will incorporate a detailed trading system or method of trading.

Within this trading system I will detail the various set-ups and triggers that I use to enable me to get into a trade.

And there lies what has been my major problem during my “training” phase.

I use many different set-ups - some text book set-ups and others self-devised – together with a maximum of 2 different triggers.

Set-up + Trigger gets me into a trade.

The word “many” is important because I feel that I look for too many potential set-ups when trying to get into a trade and very often I cannot choose between all these set-ups. The result is indecision and missed trades. The price goes steaming off in one direction and I get left behind still trying to decide which set-up I should be looking for.

I would like to get a feel for how many set-ups most traders would generally use or look out for at any one time.

Is it just 1 or 2, 10, 20 or more ?
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Old Nov 28, 2004, 11:05pm   #2
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I think I'm in rather a similar position to you, although in my case that difficulties you refer to above (with which I strongly identify) apply even more to _exiting_ from trades. However, to answer your question, I routinely trade about 5 different set-ups.
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Old Nov 28, 2004, 11:35pm   #3
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For me it depends on the type of trading day we are having, ie trending or non trending. On a trending day I will use no more than 2 setups and on a non trending day I could use maybe 4 or 5.

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Old Nov 28, 2004, 11:42pm   #4
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It's very frustrating to see a market run away from you, leaving you behind. But isn't it better to err on the side of caution? Just remind yourself that there are other markets/other times in which you'll make money. You've been doing well...Don't get too brave. Stay a bit afraid.
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Old Nov 29, 2004, 12:12am   #5
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I trade 1 core setup but have 2 other secondary setups to trade as and when I find them.

I do know of many other other setups however like Salty said in his post when I start trying to trade every setup I end up missing most of them.

I scan the whole US market every 2 mins looking for stocks setting up as per my core method and on a good day can find up to 5/6 that setup and on a bad day 1/2.

Scooby Scooby Doo
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Old Nov 29, 2004, 8:24am   #6
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Salty Gibbon started this thread Thanks guys. The responses so far would indicate that few is preferable to many.

I am toying with the idea of using 2 or 3 set-ups at a time but changing them during the trading day as the different phases of the US trading day unfold.

For example I would define the different phases as follows :-

Opening phase.........2.30pm to 3.00pm
Afternoon phase........3.00pm to 5.00pm
Evening phase...........7.00pm to 9.00pm

The market often displays consistently different characteristics during each of these phases which may require differing set-ups.
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Old Nov 29, 2004, 8:55am   #7
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Salty, pleased to hear of your positive results. A bit surprised the trading system formalisation is happening now AFTER the event rather than as a prerequisite to successfully trading. Luck has obviously been on your side and long may it continue.

As regards setups, similar (but opposite!) to Trader333. A trending market has me looking for 6 primary setups. Non-trending I'll be looking for just 2. I'll also specifically limit the number of stocks I'm 'interested' in on a trend day if a lot of setups are 'primed' - I like to keep the 'load' balanced. However, I'm always researching so this number is not static.

I'd agree with the intent of your summary above though - I prefer fewer to more numerous setups. Simply because they're (for me) mostly visual/numeric. The sort of things I use for my criteria are not easy (or even possible for the most part) to code into scanners and I have VERY limited brain power at my disposal...

As for phases - I only trade 60-120 mins after the first 30 mins and the last 60 mins.
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