How to Know Your “Perfect Trading Setup”

Have a setup that suits your personality

It’s like how the saying goes “Your business is a reflection of you.” Similar to trading, your setup should be a direct representation of your personality. If your setup does not suit you, then you are making yourself more vulnerable to headaches, stress, and even losses in your trades. Choosing a setup that suits you will give you better chances of gaining profits.

Before you start trading, ask yourself these questions:

  1. What are my strengths?

    A trader must know his/her own strengths to use them to their advantage. Pro-traders often show patience, firmness in following their plan, and control over their emotions when trading.

  2. What are my weaknesses?

    A trader must recognize his/her own weaknesses to avoid them when executing their trades. Common weaknesses shown by traders are being greedy, being overwhelmed by emotions, and not following their trading plan.

  3. How much time can I commit per day to trading?

It is important to know how much time you can commit per day to trading. This will help you figure out what kind of trader you want to be whether you are a scalper, a day trader, a swing trader, or a position trader. These will be further explained below. 

There are a dozen more questions you should ask yourself before you start trading. But, these questions should help you understand yourself more and establish grounds on how you are going to create your own trading setup.


This type of trader makes quick profits out of small price changes on their trades and they focus on making high volumes of small profits to accumulate large amounts of gains for the day. They also require a relatively strict exit strategy compared to other trading setups as one major loss may erase all their small profits.

Day trader

Like scalpers, day traders buy and sell within 1 day but trade on a longer time frame. Day traders find the best opportunity to trade for the day and hold for a longer period of time to gain large profits.

Swing Trader

Swing traders hold stocks or other tradable assets in the short-medium term (usually a couple of days to weeks). This type of trading considers the trend of a stock to tell which direction it is heading and execute an order. Unlike day trading, swing trading requires less time in monitoring your trades as there are no plans to make quick gains. 

Position Trader

Position traders buy and hold assets for the long term expecting an appreciation in value over the months or years to come. This type of trading removes the worry of short-term price fluctuations as this focuses more on the future value and outlook of the stock. Position traders consider the general market outlook, market trend, historical price data, and other fundamental factors that could affect their decision in purchasing the stock.

Do a Backtest

“History repeats itself” is a famous quote among the trading community when planning their trades. Backtesting is a strategy on how traders utilize historical price data and trends to help them execute and maximize their gains when trading. If the backtesting is proven valid on a market or stock, traders will grab this opportunity and use the historical data to their advantage.

The theoretical concept of backtesting is that the strategy that worked well in the past also works in the future, vise versa. Don’t forget to take into consideration the market condition when utilizing a backtesting strategy. Strategies used in the past during a bull market may not necessarily mean it would work on a bear market.

Try Virtual Trading

Practice really makes perfect. This is one of the best pieces of advice for newbie traders entering the market without hurting your capital while executing your trades. This way, you will know which trading strategies and setups you are most comfortable with and confident to execute when trading in the future. 

Use Investagrams virtual trading platform to practice spotting trends & patterns, setting profit targets, placing stop losses, and controlling your emotions to prepare yourself when you trade with real capital. Sign-up is completely free!

Journal your trades

It is highly encouraged for every trader to journal all their trades, especially for newbies.

Journaling will help you learn and assess those trades that went well and those that went wrong, learning from them afterward. If you don’t start journaling your trades, the tendency is you will be committing the same mistakes again in the future, resulting in losses.

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